Emerging market bank credit availability improved last quarter, despite continued problems with non-performing loans. Instead, this was offset by stronger funding conditions as western central banks printed more money. As Stevie V told us 27 years ago, “Money talks, mmm mmm, money talks”.
Holidays often give you perspective. I write this blog post while enjoying a sunset looking out over the plains of the West Cape in South Africa. With calls for increasing fiscal leniency potentially growing louder, we believe that we are already on the way to helicopter money. If this proves to be the case, what could the implications be for different asset classes?
Many are worried about the UK inflation outlook as a result of a weaker pound. Core inflation rose from 1.5% in 2008 to 3% in 2011 after the pound fell. But inflation was also under attack from higher VAT and a surge in commodity prices. So we see a more gradual increase than consensus this time around.