Shifts in the economic, geopolitical and societal landscape have proved dizzying of late. The quarter about to end has seen a dramatic counteroffensive by Ukrainians against their Russian adversaries, “Zero Covid” policy thwarting growth in China, the passing of Queen Elizabeth II and a new sovereign and Prime Minster in the UK, and persistent inflation and climate-related dislocations around the world. Many questions at the intersection of business and politics remain. Will China’s coziness to Russia and other foes of democracy prod corporations to adjust supply chains and relocate production facilities to freer lands? If so, how will it impact profits and margins—the most significant long-term drivers of equity values? How much will the war in Ukraine exacerbate European energy shortages, fostering dangerous inflation and increasing recessionary pain on the Continent? On a global basis, will similar pressures usher in ever-more populist, and perhaps even undemocratic, political movements? Mark Twain is believed to have remarked: “History never repeats, but it often does rhyme.” While some of today’s economic and political trends may echo what has come before, the confluence of considerations are unique. On a number of fronts, consensus thinking may well be in the midst of significant change, as one regime—whether literal, monetary or otherwise—ends and another begins.
Quarterly Market Outlook
The Clear Harbor Market Outlook is a quarterly market update.