Mañana

Over the last few weeks, composure in the financial markets has ceded to fear. The Fed’s mission to reduce inflationary pressure while avoiding a recession is perceived to be as easy as landing a plane during an earthquake. Meanwhile, China and Russia are autocratically doubling down on autodestructive government policies. As a result, trade partners around the world are suffering from demand destruction.

Valuation levels are jammed between dimming growth prospects and rising real interest rates - in positive territory for the first time in two years in the U.S. How bad will the squeeze be?

Investors have been behaving as if they were non-swimmers suddenly finding themselves unable to touch the bottom of the swimming pool. The limbic system has taken over. Emotions have been hijacked by the amygdala. After a lull earlier this week, market participants returned to panic mode, indiscriminately selling stocks with the Bosch theme song playing in the background: I gota feeling that I can’t let go.

Market behavior is contagious. As per a Wharton study (2017), ‘decision-makers in the real side of the economy […] will take note of what prices tell them […] then act according to the information in the price.’ In a bearish market, corporates will be tempted to freeze decisions.

Humankind is naturally predisposed to procrastination. The greatest procrastinator of all times is often considered to be Shakespeare’s Hamlet (est. 1602). Why doesn’t Hamlet take revenge after finding out about the murder of his father?

In ‘The Birth of Tragedy’ (1872), Friedrich Nietzsche, chief nihilist philosopher, suggested that Hamlet is like those individuals who ‘have gazed into the true essence of things, have acquired knowledge and find action repulsive, for their actions can do nothing to change the eternal essence of things; […]. Knowledge kills action.’ Economic actors have found out about the irremediably disjointed state of the world. This nauseating revelation inhibits initiatives. Mañana wins the day.

What could trigger a reappraisal of the situation and cure this malaise? Declining inflation in the U.S. (Q2) and Europe (Q3), reduced friction in the global supply chains, stabilizing global PMIs, China’s approval of a domestic mRNA vaccine to break the endless lockdown dynamics, and/or some form of convergence toward a resolution of the Ukraine war.

2022 has been hit on various fronts. But its initially strong economic momentum provides a hedge for the remainder of the year. Over the coming months, economic actors will be able to project themselves into 2023 and beyond with relief and excitement.


Between now and then, it is about resisting the deleterious Hamletian impulse.

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