Was it a surprise the U.S. debt ceiling was raised? Of course not; there was only going to be one ending to this theatrical stand off and Biden was always going to get his money. Of course, the real issue is when will the U.S. (and the Western world in general) get its house in order and finally start living within its means? We suspect the answer is ‘never’ so it’s only a matter of time before the whole circus rolls back into town.
Perhaps of more interest is what happens over the longer term when central banks print money and constantly meddle in a doomed attempt to control the economic cycle? Furthermore, when such behaviour is combined with eye watering deficits that governments remain unwilling to tackle, the stagflation we’ve seen over the past 12 months will become embedded. Inflation, combined with anaemic economic growth represents the worst of all worlds but when the supposed guardians of the financial system become the problem, it’s unlikely they will simultaneously recognise the need for a solution.
We remain committed to businesses that we believe possess strong franchises and pricing power.
