Despite what you might think, risk markets are in a sweet spot

Here's three reasons not to worry.

The next six months could well be easy going for equity markets, and even the more exotic markets, like emerging market bonds, which suffered when the story first broke about ‘tapering’: a possible reduction in the US Fed’s Quantitative Easing programme. Let’s consider this and the other oft-perceived threats to the markets.

QE. Yes, QE may be tapered, but only probably, not definitely, as Bernanke was at pains to emphasise in the Q & A session following his recent speech at a National Bureau of Economic Research conference. It all depends on the data, and he assured us they are actually also worried that inflation may be too low. I think we’ve seen the bulk of the rally in US Treasury yields for now. For the next few months, I think the stock markets can live with this scenario - if data’s weak, QE will go on longer, if data's strong, then companies are going to be more profitable. Taper-shock is rapidly fading.

China. I definitely do not fall into the camp that believes China is a powder-keg waiting to explode, leading to global financial and economic Armageddon. Banking systems rely on confidence. Confidence in the unlimited supply of funding, confidence that borrowers, public and private, are solvent and able to repay, confidence that collateral values, e.g. house prices, will only ever rise.

Now, institutional over-indebtedness may well have become endemic in China, but certainly not amongst individuals, and the whole pack of cards is, as ever, dependent on the same ‘confidence trick’. Although China’s sensible determination to rebalance its economy away from investment-lead growth and towards consumption is no doubt weighing down on headline GDP, in the Chinese tradition the measures will be introduced gradually and pragmatically, as evidenced this week by senior leaders’ comments. Whilst Vice Premier Zhang Gaoli said that the government would "expand domestic demand", he also assured us they would "try every method to provide funding to support SMEs, exporters, and technology firms". Premier Li Keqiang was quoted as saying that the government would "prevent economic growth from slipping below the lower bound".

With $3.3tn in foreign exchange reserves alone, which it could quietly use to rescue the banks - I suspect we’d never even know a banking crisis had happened.

The Eurozone. Portugal, Greece, Cyprus, even France, surely we face a summer of cataclysmic popular discontent on the streets? Nope. The lesson of the Eurozone crisis is the Germans and the ECB will ride to the rescue-sure, there’ll be a to and fro over austerity measures, wrestling with the balance between creation of moral hazard in the South and ensuring the Euro’s survival, but I believe the nexus of self-interests implies we have reached a state of equilibrium. This is admittedly an inherently unstable equilibrium because of the absence of a fiscal union but, once Merkel has won her election that, and its sister, banking union, will be front and centre and suddenly on the cards. Right now she can’t say so, because of the election, but she knows the Euro won’t survive another five years without them. 

Federal Reserve Board Chairman Ben Bernanke speaking at a new conference in June 2013. Photograph: Getty Images.

Chairman of  Saxo Capital Markets Board

An Honours Graduate from Oxford University, Nick Beecroft has over 30 years of international trading experience within the financial industry, including senior Global Markets roles at Standard Chartered Bank, Deutsche Bank and Citibank. Nick was a member of the Bank of England's Foreign Exchange Joint Standing Committee.

More of his work can be found here.

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No, Jeremy Corbyn did not refuse to condemn the IRA. Please stop saying he did

Guys, seriously.

Okay, I’ll bite. Someone’s gotta say it, so really might as well be me:

No, Jeremy Corbyn did not, this weekend, refuse to condemn the IRA. And no, his choice of words was not just “and all other forms of racism” all over again.

Can’t wait to read my mentions after this one.

Let’s take the two contentions there in order. The claim that Corbyn refused to condem the IRA relates to his appearance on Sky’s Sophy Ridge on Sunday programme yesterday. (For those who haven’t had the pleasure, it’s a weekly political programme, hosted by Sophy Ridge and broadcast on a Sunday. Don’t say I never teach you anything.)

Here’s how Sky’s website reported that interview:

 

The first paragraph of that story reads:

Labour leader Jeremy Corbyn has been criticised after he refused five times to directly condemn the IRA in an interview with Sky News.

The funny thing is, though, that the third paragraph of that story is this:

He said: “I condemn all the bombing by both the loyalists and the IRA.”

Apparently Jeremy Corbyn has been so widely criticised for refusing to condemn the IRA that people didn’t notice the bit where he specifically said that he condemned the IRA.

Hasn’t he done this before, though? Corbyn’s inability to say he that opposed anti-semitism without appending “and all other forms of racism” was widely – and, to my mind, rightly – criticised. These were weasel words, people argued: an attempt to deflect from a narrow subject where the hard left has often been in the wrong, to a broader one where it wasn’t.

Well, that pissed me off too: an inability to say simply “I oppose anti-semitism” made it look like he did not really think anti-semitism was that big a problem, an impression not relieved by, well, take your pick.

But no, to my mind, this....

“I condemn all the bombing by both the loyalists and the IRA.”

...is, despite its obvious structural similarities, not the same thing.

That’s because the “all other forms of racism thing” is an attempt to distract by bringing in something un-related. It implies that you can’t possibly be soft on anti-semitism if you were tough on Islamophobia or apartheid, and experience shows that simply isn’t true.

But loyalist bombing were not unrelated to IRA ones: they’re very related indeed. There really were atrocities committed on both sides of the Troubles, and while the fatalities were not numerically balanced, neither were they orders of magnitude apart.

As a result, specifically condemning both sides as Corbyn did seems like an entirely reasonable position to take. Far creepier, indeed, is to minimise one set of atrocities to score political points about something else entirely.

The point I’m making here isn’t really about Corbyn at all. Historically, his position on Northern Ireland has been pro-Republican, rather than pro-peace, and I’d be lying if I said I was entirely comfortable with that.

No, the point I’m making is about the media, and its bias against Labour. Whatever he may have said in the past, whatever may be written on his heart, yesterday morning Jeremy Corbyn condemned IRA bombings. This was the correct thing to do. His words were nonetheless reported as “Jeremy Corbyn refuses to condemn IRA”.

I mean, I don’t generally hold with blaming the mainstream media for politicians’ failures, but it’s a bit rum isn’t it?

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Daniel Hannan. You can find him on Twitter or Facebook.

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