By John Stepek – MoneyWeek Magazine (Great Britain) –
I was in the pub with a financial adviser friend earlier this year, not long after the Brexit vote. Being based in Scotland, he’d already seen his business disrupted by the independence referendum in 2014, and now, post-Brexit, he was worrying about the prospect of a re-run.
“I’ve been in this business for 30 years,” he told me. “But I’ve never spent as much time thinking about politics as I have this year.”
I know what he means. There was a time, before the financial crisis, when markets would cheerfully shrug off political leadership. The blissful assumption was that most nations were heading in the same direction. An embrace of shareholder capitalism, free trade, “independent” central banking, and minimal interference in markets was inevitable.
Politicians didn’t matter, because they all basically believed in the same thing. Left-wing or right-wing, they would all largely get out of the way of business and it was only a matter of time before even the most obscure emerging markets joined the party.
Not any more. This year has been the final nail in the coffin for the idea of any sort of global consensus, with voters rebelling against the values of “Davos man”, as Charles Gave of Gavekal has put it.
This is not a bad thing in itself – a revolt was inevitable, given the apparent failure of the establishment to learn very much, if anything, from the crash of 2008.
Unfortunately though, the return of politics to markets means that we can’t assume that any particular economic or investing argument is “settled”.
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