The Cambridge Weekly – 16th August 2021

The Cambridge Weekly – 16th August 2021

Climbing the Wall of Worry – Again

August continues to be what one would expect from the middle of the summer: quiet. Yet for investors, it is also pleasing that stock markets around the world are gradually nudging upwards, allowing them to remain relaxed wherever they have retreated to in these travel restricted times.

The Transitory Inflation Argument

Given how often we have mentioned inflation in the Cambridge Weekly this year it will not be much of a
surprise to readers that many see it as the main investment topic of 2021. With vaccines rolled out but
supply disruptions still a widespread issue, market attention has once again turned to prices in the postCOVID world. Given the current backdrop this makes sense even to the lay investor – central banks all over the world are pinning down interest rates and pumping vast amounts of monetary liquidity into their economies. The US government, meanwhile, is touting a $4.1 trillion fiscal package to support growth (covered in the next article). All of this while the public emerges from lockdown having substantially built up savings, and businesses struggling to source workers at every turn.

Us Politics Risk Slowing the Pace of the Recovery

US politics can be a slog. Lawmakers in the US Senate debated the Democrat’s budget resolution for 14 hours. Senators voted on 47 non-binding amendments during the marathon debate, as politicians on both sides piled on everything – from major legislative revisions to pet projects and symbolic gestures. Actually, 14 hours is rather a short time for such major legislation. The two central pieces of Biden’s $4.1 trillion economic agenda made it through, though one had a much harder time than the other. US politics can be a slog. Lawmakers in the US Senate debated the Democrat’s budget resolution for 14 hours. Senators voted on 47 non-binding amendments during the marathon debate, as politicians on both sides piled on everything – from major legislative revisions to pet projects and symbolic gestures. Actually,14 hours is rather a short time for such major legislation. The two central pieces of Biden’s $4.1 trillion economic agenda made it through, though one had a much harder time than the other.

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