John Rubino – Market Effects From High Energy Prices, Central Bank Tightening, High Inflation, And Safe Havens
John Rubino, Founder of the Dollar Collapse website, joins us to discuss how the high energy prices, pricing inflation, corporate margin compression, and central bank hawkishness are creating volatility in the global markets. We discuss how energy is a tax on almost everything affecting both consumers and corporate cost inputs, but so far demand has remained elevated.
We’ve all seen the financial markets start breaking down last year and that trend has continued into this year, but this market weakness and slowing growth could be prolonged if inflation stays elevated and if central banks don’t tighten enough to really impact it. In addition to the Fed, the ECB is now stating that it will start hiking rates after Q2 and we discuss what this may men for sovereign bonds and the issues the PIGS (Portugal, Italy, Greece, Spain) had in the past before the ECB ran everything through German bonds. The central banks have a choice to make about whether they’ll stay focused on tightening and trying to bring down demand and inflation, or whether they’ll eventually need to reverse course again and bail out the markets with renewed liquidity.
The discussion wraps up on the topic of what are still safe haven assets, and in particular how is gold behaving, not just in dollar terms, but in relation to other key global currencies. John outlines how the precious metals markets may react to either the deflationary scenario or the persistently high inflation scenario for investors to consider.