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Tuesday 12 September 2023

Comment by Editor-in-Chief, Robin Bradley

What is "Business as Usual" Anyway?

I have developed a new armchair sport. Like all sports, it needs structure, and it needs objectives. My working routine, when home, is to either work from the nearby office we rent, or, ever since the pandemic, to spend at least as much time working from our home offices.

That suits me anyway as I have never been an enthusiastic early starter and have generally worked at least East Coat, if not Midwest hours - it's been a 30-year habit for me and hard to shake.

This new sport is simple really. Given the five-hour time difference between our home and New York, I'll generally settle down in front of 'The Box' at around 2:00 p.m. our time and watch 30 minutes of 'talking heads' - investors, advisors, analysts, CEOs and the like - on CNBC or Bloomberg, then watch for 30 minutes more following the NYSE opening at 2:30 p.m. our time (9:30 a.m. ET).

Paying attention to the markets and the thin BS infused air of the corporate world isn't exactly new for me, but very gradually, in the past 24 months, the background music of stock indices that don't know whether they want to "shag, shit or shave" (to coin an old British military expression) has led me to a startling moment of epiphany.

Far from being the all-knowing, all-seeing sage-like fonts of insight and wisdom that we assume them to be (that we need them to be), in fact, said 'talking heads' have no idea whatsoever what is going on. 

" influential and tone-setting "

They have no real idea what is happening with the stock markets recently, or what direction developed global economies are likely to take in the coming 24 months. I first started to suspect that all was not right in the world of financial analysis when, coincident with the new CEO, the character and nature of the questions at the quarterly Harley-Davidson results investor conference calls started to become noticeably 'thinner' - both numerically and in substance.

The former might simply be Harley's appointed call-moderating agency following through on instructions to keep it shorter and let the denizens of Harley's virtual C-suite wriggle off the hook and get on with their lives as quickly as possible.

But these days, the style of questions is less well informed than it used to be and the insights that emerge less substantial. I sense I am witnessing the exact same cycle of uncertainty play out on the financial channels and financial pages.

One can somewhat forgive the professionals for their state of confusion and uncertainty as, for sure, these are confusing and uncertain times - they should just come clean and be honest about not knowing what is happening. But like that is ever going to happen!

Are these the most awful of times, in business terms? Well, no, that would be going too far. There are still plenty of businesses making good money around the world and most major metrics - especially employment rates - don't exactly have imminent doom coded into them, despite the great waves of inflation and interest rate hikes our central banks have collectively determined that we should be exposed to.

However, are these the best of times? Well, no, neither are they that good. Does global fiscal and monetary policy management community have the clear-eyed, calm assurance and certain touch that we need and have the right to expect? No, patently not.

The only consistent characteristic I am sensing about bank and government financial policies currently is the inconsistency. Uncertainly shuffling one way and then the other in ever increasingly and worrisome short duration timescales as they flop from one direction of travel to another - no doubt hoping nobody will notice. That is if they themselves realize that is what they are doing.

I just got back from Madison, Wisconsin, around 36 hours before writing this piece, where I had been enjoying the latest iteration of LeMans Group's increasingly influential and tone-setting NVP Parts and Accessory Dealer Show - vendor reviews to come in the October and November editions of AMD Magazine.

While there, I found myself discussing this apparent trend of inconsistency and uncertainty with many people, and they all agreed that either the complexity of the matrix of issues (inflation, labor shortages, war etc.) has made nailing a perspective akin to putting your thumb on quicksilver, or the financial community has had so much difficulty in doing so for so long that they have basically just given up forecasting and are simply waiting out the storm like the rest of us.

With many serious issues appearing to have resolved themselves, or at least be headed in that direction (pandemic, supply chains, logistics, decline in unit registrations etc.), one can be forgiven for assuming that some of the clouds should have dissolved to reveal some degree of clarity. But no, that does not yet appear to be the case. Besides, just as one crop of issues does start to resolve, others cloud the crystal ball to replace them. Manufacturing global financial uncertainties appears to be the one true growth industry.

The show in Madison had a reassuring sense of "Business as Usual" about it, in that some of the recent problems do appear to be less acute now and, finally, the market is starting to be able to embrace a degree of reliability in terms of its expo cardician rhythms. The inner child in all of us does respond well to stability and predictability.

Though where the rhythms of our humble business cycle are concerned these days, how exactly are we supposed to define "normal"?

Yes, inflation does appear to be coming down (prices aren't, and likely never will, it's just the rate of increase that is slowing), consumer goods affordability does appear to be improving thanks to increased pay rates, and the process of raising interest rates to combat the forces of inflation does appear to be nearing top dead center.

But hold on a moment. Aren't higher interest rates, increased pay rates and high levels of employment in and of themselves inflationary? Damaging to capital availability, affordability and investment cycles?

Meanwhile, lest anybody had forgotten, just a gentle reminder that we in the West are still fighting for the survival of democracy, freedom and our way of life.