Markets Like Coordination
Macro Perspectives: Wed 20 Apr 22
The Spring meetings of the IMF and World Bank governors are in Washington this week, and include central bankers, ministers of finance, private sector executives and academics.
It's a busy week for the central planners. These are the people that have determined that our global economy will be transformed, in coordination, to meet their vision of what is "sustainable" environmental, social and governance (ESG).
Now they are reporting on the problems they have created, and are meeting to collaborate on how to solve them.
On the former, the IMF released its annual world economic outlook report (link below) yesterday morning - I have only skimmed through the material - it includes growth downgrades and inflation upgrades.
They see war-related supply shortages amplifying existing inflationary pressures, raising prices of food, energy and metals. They see risks of social unrest, and "serious risk of global economic fragmentation."
This all sounds pretty bad.
But if there's one thing we've learned through the Global Financial Crisis (GFC) and the Global Health Crisis (GHC), it's that markets like global coordination. The turning point for markets and global confidence during the GFC was the G20 meeting in April of 2009 - the G20 pledged to work together to resolve "a global crisis with a global solution."
Markets turned well before there was any visibility on a favorable outcome for the global financial system. On March 16th, 2020 the G7 leaders held a video conference to discuss a coordinated response" - stocks bottomed five days later.
So, these dismal headlines from the IMF hit at 09:00 EST. At the 09:30 open, stocks went straight up (not down).
With all of this said, it's probably a good time to get global finance leaders together as we head into the French election this weekend. A Le Pen win (an anti-globalist and anti-euro candidate), would be highly destabilising for the global transformation agenda - the first spot that would need globally coordinated central bank attention would be the European sovereign debt market (the bonds of the fiscally weaker euro zone countries would become very vulnerable).