Lettuce Won
After weeks of turmoil created by misguided economic policies, the UK Prime Minister resigned this week
“Governments never learn. Only people learn.”
Milton Friedman
Readers of this newsletter have been following the experiment conducted by the UK over the past few weeks. The Truss government decided to try and see if anyone would notice that they were doing exactly the opposite of what a country like the UK should do to tackle inflation and restore confidence. Markets noticed, and Liz Truss had no choice but to resign on Thursday.
This resignation means that Liz Truss lost her contest against Daily Star’s lettuce (see last week’s newsletter here if you haven’t been following the lettuce story). Congratulations to lettuce!
But don’t feel bad for Liz Truss. She will be very much taken care of for the rest of her life thanks to her 45-day contribution to the UK as Prime Minister.
What is next for the UK? If history is any indication, the UK will first try and restore confidence with capital markets before eventually firing up the money printer. Like every single government has done since 2008.
One thing the UK needs now is stability.
In case you missed this very important news earlier this week, click on the thread below to read about the US decision to ban export of certain semi-conductors to China and to prevent US persons from working in the industry in China.
China has not retaliated yet, but it’s unlikely to remain passive after such a strong decision.
Financial markets continue to be under severe pressure. Look at how the valuations of social media companies have changed since their peak in 2021.
Markets are forward-looking, which means you can expect the stock market to bottom out before the economy. Historically, markets bounced back six to nine months before the economy.
On investing, I invite you to click on the very well-done thread below by Brian Feroldi. During bear markets, it’s important to zoom out and go back to fundamentals of investing.
After lecturing Europe and developing countries for years (and continuing to do so), Germany is currently deconstructing a wind farm to make room for… a coal mine!
Best Podcast Episodes of the Week
I listen to many podcasts every week. You will find below the links to a selection of the episodes I found most interesting this week.