Daily Commentary

MarketMinder’s View: There is a lot of good sense in this, which argues the ECB’s rate hike today risks proving to be a monetary error—if it proves the start of a cycle. As we have noted, this highlights and contrasts Europe’s energy markets now with 2022, when Russia-related energy price jumps were far, far larger. It highlights progress in refilling gas storage for the winter, a lack of flow-through from energy to other goods and calmness in food prices. All that is sensible. Yet it missed the key difference: 2022’s inflation, like all inflation shocks, was chiefly about vastly excessive money supply growth, which we don’t have today. But all in all, this is a fairly good look at the lack of lasting inflation pressure in Europe. Like this piece, we don’t see one hike as a calamity, as it won’t invert the yield curve and cause credit to freeze. But more hikes could—a risk worth watching.

MarketMinder’s View: Despite recent stock market churn, gold is down again this week, with the slide through early Thursday putting it down -5.9% year-to-date, per FactSet data. This follows the year’s early, 23.7% boom through January 29. All this illustrates some core points that this article frankly misses. One, gold is volatile. Very volatile. More volatile than stocks. Hence, the big January boom. And the bear market gold is now in (it is down -23.9% from January’s record high). Two, this is all coming as war breaks out and oil prices and inflation fears surge. Gold is supposed to hedge you from that stuff, if you buy the common wisdom. You shouldn’t buy that thinking, though, because it has never been true. Hence, all the gymnastics this article goes through to try to explain why gold isn’t up given these supposedly “bullish” drivers are totally and entirely unnecessary. Accept the point: Gold is no haven. No hedge. No chaos cushion. It is a commodity with little industrial use that sways on little more than fickle sentiment. It has no place in a well-constructed portfolio, in our view.

MarketMinder’s View: Per the article, The World Bank has revised its forecast for 2026 global economic growth down to 2.5% from 2.9% in January, largely tied to elevated commodity prices and interruptions to trade stemming from the Iran war, which it paints as “the biggest supply shock in 50 years.” As a consequence, the body says the US will grow 2.2%, outpacing Europe and Japan, with Gulf nations Kuwait, Iraq and Qatar hardest hit—whose growth will flatline. Now, read all that text again, which is literally what the article says. Does that square with “worst hit since COVID”? This is all a lesson in “Worst Since” logic, which relies on the reader to conflate the present with the comparison, even if the language doesn’t specifically mean that. In that vein, consider: The lockdown-driven recession was an intense (but short-lived) global contraction in economic activity. That is a far cry from this forecast. Then again, even the forecast’s depiction of supply shocks is a little questionable. Consider 2021/2022. The supply chain was so disrupted you couldn’t buy toilet paper in major US cities—and others worldwide. Goods of all kinds saw shortages! Even in energy, Europe in 2022 didn’t have the infrastructure to import natural gas in volume. Now it does. Prices were orders of magnitude higher then. Oil? Yes, the Strait remains largely closed (even though reports suggest some 2 million barrels are quietly exiting via tankers today). But workarounds mean some 7 million more barrels are avoiding the Strait via pipeline. So, look, this forecast does show economic expectations are down, which is bullish. But this coverage of it is even more dour, which helps keep sentiment broadly in check (even if pockets of AI froth exist).