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  • Martyn Johnson

Covid, Inflation, Interest rates, Ukraine

In this edition I am moving off plan since the above stuff is both topical and of concern.

Market Commentary

Inflation up but likely to fall in coming months (see below).Markets fairly resilient in spite of Putin’s folly. Chinese birth rate falls by almost one third between 2019-21 – is this why they don’t want to catch Covid?

More Market Commentary

Background: In March of 2020 we were facing a global plague which had the potential to kill us, creating fear and uncertainty; this is what we wrote in early 2020, please also see the ‘Black Swan’ bit at the bottom, which is relevant still:

We are again in ‘interesting times’ as the Chinese say…

There follows our forecast of how investment markets will fare over the medium term:

  • Covid: In people’s minds we believe that this is now turning from the aforementioned horrible plague to the equivalent of influenza and will eventually be relegated to the same level as the common cold – with the caveat being China who seem quite sensitive, although their lockdowns will end at some point. Markets recovered in 2020 and ongoing effects are decreasing.

  • Inflation: Up now and then down later. We feel this will be controlled by people globally cutting down somewhat on non-essential expenditure. In the short term we will need to call on fossil fuels but the longer term is greener. By the end of the year, we expect inflation to have fallen back. Market effect slowly decreasing.

  • Interest rates: The media seem quite shocked by the UK rate of 1% - for those of us who have been around for a few years (and those trying to live off their savings) this does not appear high. Rates might go up further but using monetary policy to choke off demand by raising borrowing costs would put more squeeze on real income – rates are unlikely to rise to anything like the levels we have seen historically. Market effect – limited impact.

  • Ukraine: Vladimir Putin’s tragic adventure. Three possible outcomes: Over shortly – markets will approve and settle. Carries on for years a la Vietnam - markets will get used to this and get back to business as normal. Nuclear – no point in worrying about this as ultimately it will not matter... Market effect – likely reducing.


History is our only guide to the future and history has continued to demonstrate the resilience and adaptability of the human race. It apparently takes a few months to change people’s psychological resilience (they get used to stuff) after which we believe there will be more confidence.


Inflation, energy & interest rates: People selling cars are now adding to the normal ‘low mileage / one owner only’ features ‘full tank of fuel’, presumably this makes the vehicles more theft attractive... I have just re-negotiated my energy tariffs, that is (I have) taken what was offered and considered myself lucky that they answered the phone. Food - happily, my wife pays for our grocery bills.

So… this is probably a good time to either borrow money or to invest – but not both.

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