Scary Stories

I never “got” horror movies.

Shot from German horror film “Nosferatu.” Public Domain in US. Source: Wikipedia

Oh, sure, I understand there’s an adrenaline rush that comes when the hero and heroine are in danger. And when they wait, listening at the closed door, only to realize that the murderer is already in the room with them. I get that. But I never understood the desire to see nasty things happen again and again and again. I want them to get out and escape.

And I can’t comprehend why otherwise responsible people repeat senseless economic scary stories. The US Dollar is not about to collapse, taking the market down with it. Our economy is stronger than it has been in years. Last quarter’s strong GDP numbers were certainly boosted by tax cuts, but profitable businesses are spending more on equipment and new workers, and firms are shipping and receiving goods at a record rate. This isn’t fake news. Unemployment is low; the economy is strong. Truck tonnage, for example, is up 8% from a year earlier.

Source: American Trucking Associations

Britain has a similar problem with scary stories right now. There are trucks parked along UK freeways or stuck in gridlocked ports. People are stockpiling food and medicine. There are even reports that the military is on standby in case of civic unrest.

The problem comes from the fact that to strengthen its hand in negotiations with the EU, the UK government encouraged citizens to be prepared for a “no deal” Brexit – a Brexit where the United Kingdom leaves the European Union without any special customs arrangement.

EU Map. Source: Wikipedia

Britain does source 30% of its food from the EU, and food has to keep moving through just-in-time inventory systems. But global supply networks are extraordinarily resilient. They deal with storms, famines, strikes, and regional conflicts. While there could be some delays and disruptions, and perhaps fewer choices on the shelves, the specter of mass hunger and uncontrollable mob rule seems like a scary story designed to create political pressure – like the scary movies kids go to on dates. There are often other motives involved.

Let’s face the facts: we’re not facing a global war or massive famine. Our economic system isn’t teetering on the edge of a precipice. We heard similar dire predictions of economic Armageddon before Y2K and during the Greek debt and Euro crisis. Yes, there are strong political issues that must be addressed. There always are.

But the world has a funny way of not ending.

Douglas R. Tengdin, CFA

Charter Trust Company

“The Best Trust Company in New England”

By |2018-07-31T07:03:48+00:00July 31st, 2018|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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