A tough week for investors
Stock markets have heaped plenty of woe on investors this week, says John Stepek. At least workers have reason to be cheerful.
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It's been so long since we've seen sustained wage inflation that most people still can't quite wrap their heads around the idea. And it's only just starting to make itself felt in the official data. But this is worth paying attention to. As I outline in this week's cover story, the recent turbulence we've seen in the US and global markets has been driven primarily by nerves over rising interest rates. Rising rates, in turn, are being driven to a great extent by markets starting to wake up to the fact that we're no longer at imminent risk of plunging into deflation.
Why are big, forward-thinking, employers such as Amazon and J.B. Hunt paying people more? For the same reason that you pay more for any other service or product because you have to. Unemployment in both Britain and America (and Japan, for that matter) is now at multi-decade lows. For several years after the 2008 crash, most people were grateful just to have a job. Now they can pick and choose.
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As a result, if you want to recruit the best staff and you want to hang onto the staff you've got you have to offer them more. As retail consultant Gerald Storch told CNBC, Amazon has put its rivals on the spot. "I cannot believe that others aren't going to follow suit very rapidly. If you don't, you have a demotivated workforce. So the retailers who can afford to are absolutely going to get there a lot faster than they were going to."
This is good news. We've been pointing out for years now that one big driver behind today's political upheaval is the fact that while asset prices have soared, pay packets have not. Capital has won out, while labour has seen its fortunes stagnate. That needed to change and it is. However, it means that those on the other side of that equation investors among them need to be prepared for more turmoil. See our cover story for our take on how to adapt.
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Average UK house price reaches £300,000 for first time, Halifax saysWhile the average house price has topped £300k, regional disparities still remain, Halifax finds.
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Barings Emerging Europe trust bounces back from Russia woesBarings Emerging Europe trust has added the Middle East and Africa to its mandate, delivering a strong recovery, says Max King
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Inflation may be slipping but there is still plenty of misery aheadEditor's letter Inflation may be a little lower than last month as the prices of petrol and diesel fall back, but it remains structural and long-term, says Merryn Somerset Webb. And there are no painless solutions.
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Beat the cost of living crisis – go on holidayEditor's letter As inflation rages, energy bills soar and the pound tanks, what’s a good way to save money this winter? Go on holiday, says Merryn Somerset Webb.
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How to tackle rising inflation and falling stockmarketsEditor's letter Inflation is rising around the world. Even though inflation is widely expected to return to around 3.5% next year, it is still wreaking havoc. Merryn Somerset-Webb explains what to do about it.
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How capitalism has been undermined by poor governanceEditor's letter Capitalism’s “ruthless efficiency” has been undermined by poor governance, a lack of competition and central banks’ over-enthusiastic money printing, says Andrew Van Sickle.
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Don't be scared by economic forecastingEditor's letter The Bank of England warned last week the UK will tip into recession this year. But predictions about stockmarkets, earnings or macroeconomic trends can be safely ignored, says Andrew Van Sickle.
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The biggest change in the last 17 years – the death of the “Greenspan put”Editor's letter Since I joined MoneyWeek 17 years ago, says John Stepek, we’ve seen a global financial crisis, a eurozone sovereign debt crisis , several Chinese growth scares, a global pandemic, and a land war in Europe. But the biggest change is the death of the “Greenspan put”.
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The wolf returns to the eurozone’s doorEditor's letter The eurozone’s intrinsic flaws have been exposed again as investors’ fears about Italy’s ability to pay its debt sends bond yields soaring.
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Things won't just return to normal – that's not how inflation worksEditor's letter You might think that, if inflation is indeed “transitory”, we just need to wait and everything will return to “normal”. But this is a grave misunderstanding of how inflation works, says John Stepek.
