All of this makes sense. Wherever you turn, the argument for favoring non-U.S. equities over the U.S. remains robust. And Minack is right that a lot is riding on bullish earnings forecasts.
But we still might prefer not to find out what happens if rates do surprise by rising. U.S. markets have been working on the assumption that they will stay low for a while. It has been an unspoken ceteris paribus clause. The sharp corrections in response to slightly higher rates in 2013 and 2018 both forced central banks into climbdowns. We don’t yet know the results of an experiment in which rates rise and central banks cannot climb down because the economy is growing and inflation is back.
Survival Tips
The weekend is almost here, so let’s try some jazz. It’s what I’ve been listening to this evening. Just as a hunch try listening to the Wedding Song by Uli Geissendoerfer. I can’t even remember how it came to be in our CD collection, but it’s a lovely melody. There’s also a second version.
Now, as uptown Manhattan braces for cutbacks in subway service which could really mess with the practicality of living here, try Take the A Train, the Duke Ellington standard named for the fastest way to go to Harlem (and my own even more northerly neighborhood of Washington Heights). For only slightly modernized takes, try Wynton Marsalis with the orchestra from Jazz at Lincoln Center (right on top of an A train station), Dave Brubeck, and an extraordinary vocal performance by Ella Fitzgerald.
Those trains lead to Take the Coltrane in a performance by Ari Hoenig (I’ve no idea how it’s possible to play a piano like that), and, inevitably, Soultrane (as played by Chet Baker) and Blue Train by John Coltrane. That’s where my train of thought took me, anyway. Try listening to some jazz, and enjoy the weekend.
John Authers is a senior editor for markets. Before Bloomberg, he spent 29 years with the Financial Times, where he was head of the Lex Column and chief markets commentator. He is the author of The Fearful Rise of Markets and other books.