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Market Update 3rd April 2023


David Attenborough is 97 in a month’s time. His latest broadcast of genius, Wild Isles, is typically intoxicating. Ken Bruce, a youthful 72, this morning has begun his new career on Greatest Hits Radio (and yes, I am listening as I am typing, and scored 18 and 27 on Pop Master). Last week I saw on LinkedIn a report of a meeting someone had just had with the 99 year-old Charlie Munger. His sidekick, Warren Buffett, is a mere 92.

These are just some casual observations that experience, possibly, still has a certain merit in life. There are virtues in having been around the block a few times, having seen water pass under innumerable bridges, having been there and seen that, a graduate from the university of hard knocks.

I was searching the omniscient tinterweb for synonyms to assist my list of descriptions of ‘experience’. One of the more prominent and, may I say, less helpful websites suggested that I should contemplate using the following: ancient, antediluvian, antiquated, gray (sic), shot, creaky, moth-eaten, over the hill, passé, senescent and worse for wear. I have of course been selective in my choices, but there is a certain something that those of us who are moth-eaten and antiquated can bring to the understanding of the incessant madness that drives day-to-day financial markets.

Whilst I was improving my first-hand experience of winter sunshine last month, apparently there was a banking crisis. I know this, because I read it. Apparently Nessie has been seen again as well, but if I went to Loch Ness I am not completely sure that I would be able to corroborate that. Equally, as I scan the world around East Cornwall, so I am unable to see the financial institutions of the world crumbling around me. It was a little different in 2008. It is a fact of Planet Earth that bad businesses go bust from time to time. There is nothing in the rules of Planet Earth that says banks have to be sensible, well run and prudent institutions. Indeed, the very concept is probably causing widespread mirth. What we had was the coincidence of a couple of very silly American banks and one notoriously mismanaged Swiss one going belly up at the same time.

If we can quickly return to 2008, the great banking crisis was essentially caused by the lunacy of innumerable banks having invested money that they didn’t have into things that didn’t exist. It was not a great plan. It is an odd truism of the banking industry that everyone is the breath of a hare (sic) away from insolvency. No one has enough money to give all the depositors their cash back if they want it. The whole shooting match is shored up on that most human of emotions: trust.

But how should one judge this concept of ‘trust’. Should one do business with the cheapest, or the most trustworthy? How is that complicated if the most trustworthy is the most expensive? How should we value ‘trust’, or what Hawksmoor once called ‘sleepatnightability’? The questions of course are rhetorical.

I confess that the current bunch of esteemed central bankers gives me the opposite of sleepatnightability. Au contraire, it verges on irascible dyspepsia. Last week the venerable Andrew Bailey, Governor of the Bank of England and thus one of the most financially powerful people in the gap between Venus and Mars, delivered a speech entitled “Supply matters” to the London School of Economics. As with the banking crisis, I was reluctant to take the reports of this speech at first hand, and dug out his actual text. I have to say that, much to my surprise, the reports are quite accurate. So please allow me to quote in full from the text:

“Instead, the rise in economic inactivity is a change to the supply of labour, independent of demand, in particular by older workers. If those workers have accumulated enough savings to sustain a desired level of consumption much like the one they had before their early retirement, at least for a while, aggregate demand will not have fallen by as much as aggregate supply. We should expect this to put upward pressure on inflation in a way that would call for a higher level of interest rates to dampen demand.”

So yes, Mr Bailey really did say that early retirees are causing inflation and are forcing him to put up interest rates. Higher mortgage rates, and the pain of these, according to Mr Bailey are the fault of those who do not work until their ever-increasing retirement age. And nothing to do with his, and other Central Banks, dogmatic pursuit of quantitative easing, oblivious to its success in raising inflation. Our beliefs should be well and truly beggared.

Jim Wood-Smith – Market Commentator and Head of Climate Transition

Hawksmoor Investment Management Limited is authorised and regulated by the Financial Conduct Authority ( with its registered office at 2nd Floor Stratus House, Emperor Way, Exeter Business Park, Exeter, Devon EX1 3QS. This document does not constitute an offer or invitation to any person in respect of the securities or funds described, nor should its content be interpreted as investment or tax advice for which you should consult your independent financial adviser and or accountant. The information and opinions it contains have been compiled or arrived at from sources believed to be reliable at the time and are given in good faith, but no representation is made as to their accuracy, completeness or correctness. The editorial content is the personal opinion of Jim Wood-Smith, Market Commentator and Head of Climate Transition. Other opinions expressed in this document, whether in general or both on the performance of individual securities and in a wider economic context, represent the views of Hawksmoor at the time of preparation and may be subject to change. Past performance is not a guide to future performance. The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations. You may not get back the amount you originally invested. Currency exchange rates may affect the value of investments.

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