The Brexit vote, the election of Donald Trump and the gains made by antiestablishment political parties in the West mark the rise of a long-forgotten phenomenon: populism. It promoted fascism when it last reared its ugly head in the 1930s.
It marks an inflection point for the globalisation that has lifted hundreds of millions of people out of poverty in the emerging economies. But it has also reduced prices and median wages in developed economies, causing job insecurity, political alienation and social dysfunction.
Voters are angry. Politics has now become an arena to celebrate all that is small and mean where placebos are paraded as panaceas via angry sound bites.
The most immediate danger is the new wave of tit-for-tat tariffs unleashed by President Donald Trump this year. Do they amount to a full-on trade war or just a brief skirmish? Only time will tell.
Earlier hopes that wiser counsel will prevail after the resignation of his top economic adviser Gary Cohn were short-lived. The cold hard truth is that President Trump sees only what he wants to see.
This is not just a passing phase. Each twist in this saga is chipping away investors’ confidence. But few are at panic stations – yet. Most are hawkishly watching events.
If you are interested in how pension investors are adjusting their asset allocation to this new reality, and have a subscription to the Financial Times, please see my article in the FTfm on 2nd July 2018.