I’ve been thinking about when the next bull run could start, given the context of future events and how things could play out.
I should start by saying that I expect that there will be bull runs in different markets (such as the housing market) depending on things like the start of dropping of the OCR relative to the economy’s health. This article however, focuses on the alignment of events that will likely lead the world’s economy into the next prolonged bull market.
What got me thinking about this was the significant possibility that the Republicans (possibly lead by Trump) could take power in the next election (which I expect will be in 2024). A Republican win would herald a humanitarian disaster in Ukraine and triumph for Putin, given that:
- Financial, humanitarian and military aid to the Ukraine from the USA dwarfs that of all other countries.
- Trump supporters / Republicans don’t seem to be the sort of people to care about foreigners (they seem largely America-centric as per Trumps last campaigns) and don’t seem smart enough to understand the broader implications of foreign policy, never mind the complexity of how policies have come about and the effect of unwinding them.
That said, a Republican win in the mid terms would likely mean that Russia would be holding out for military defunding of Ukraine and a guaranteed prolonging of the war (if that’s not already his strategy anyway).
Fortunately it’s looking as though we don’t have to consider the above, as it looks like the Democrats may have seized it.
Economically speaking, I would expect that if America stopped funding Ukraine, this would result directly in a win for Putin, which would likely cause a return to normality for fuel and food inflation as the Ukraine suffered the new normal, whatever that may look like.
So it seems that despite my musings, we remain in no better position to predict future events than before. I have no answers for when the next bull market will break out. I will however suggest that the more things remain the same, the less will change.
That means more inflation to come, more OCR increases and more wage inflation until we hit a recession.
The best course of action seems to be to clear debt, invest sensibly (revise your financial models to consider inflation and personal risks, revise your goals, work out risk vs. reward requirements and investment allocations in your portfolio)… oh, and make sure you are highly employable to the labour market and not at risk where you currently work.
One reply on “When Will The Next Bull Start?”
It seems as though the Republicans have won the House. My basic understanding of things is that the House is like the House of Lords in the UK, whereby laws generated by parliament (the Senate) must be passed by the House in order to become law.
In hindsight, this election risk is probably part of the reason why the USA has been suggesting to the Ukraine that they should negotiate.
Humanitarian horrors aside, whatever the conclusion of the invasion, this vote will likely return part of the world’s economy to normal. Fuel and food prices will rise less aggressively.
Though it’s worth noting that food prices in NZ will continue to inflate as the government continues to severely restrict the number of incoming seasonal workers, who are required as pickers for our farming industry.
I expect this will likely be fixed when National regain power, which should have a significant impact on at least 2 of the NZX farming stocks and possibly 2/3 others that farm or provide ancillary services to the rural sector.