I spoke with BNNBloomberg yesterday about the currency market and a theme I've been writing about this week:
We’re seeing the covid playbook rolled out on energy. During covid, businesses had to shut down but all the costs were taken on the government balance sheet. That’s when we saw the huge turnaround in markets.The UK is signaling that it will do the same thing by capping/subsidizing energy and more countries in Europe are leaning that way as well.Like covid, this could be a turning point.What’s different this time is that monetary policy isn’t cooperating. In fact, it’s headed in the opposite direction. On net, that’s still good for corporations and nominal growth but the debt loads are getting too high and the relief valve is the currency.
Since mid-week, equitiy markets in Europe have turned around and that's an encouraging sign. The FTSE 100 is up 1.3% and the DAX higher by 1.4%.
