Opinion today: The menace to the bull market

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The meetings of the International Monetary Fund and World Bank in Bali last week produced a tentative warning about the future of the global economy: On the plus side, the IMF predicted continued strong growth, with global output growing 3.7 per cent both this year and next. The bad news is that this is a reduction of 0.2 percentage points from its April forecast.

The precarious situation reminds Martin Wolf of the “wall of worry” that bull markets are said to climb. The idea is that when the last worrier turns into an optimist, the market must start to fall. With the prices of financial assets already so high — in the US, above all — he adds, it is a long way down. An accident is waiting to happen.

The greatest risk to global financial systems, Martin writes, is the US assault on China. US President Donald Trump has already mounted a trade war and talks of stopping the Chinese economy from overtaking the US, auguring a new cold war that would be more damaging than the last. The world’s economy and financial systems are fragile, warns Martin. Nobody can know how fragile until they are really tested.

Stuart Eizenstat recommends that Mr Trump take a lesson on dealing with the Federal Reserve from his predecessor Jimmy Carter: leave well alone. He argues that President Carter was selfless in keeping a clear-eyed, arm’s-length relationship with the central bank.

Sarah O’Connor notes that workplace exhaustion is a vicious cycle in the UK, with Britons working harder and faster for no productivity gain at all. Employers wanting to improve workers’ mental health should start by asking meaningful questions rather than offering superficial solutions.

Fred Studemann offers some tips for the Anglophone chattering classes to use while discussing German politics at dinner. Remember to pepper the discussion with allusions to Das Auto, Mitbestimmung, Schuld and Lederhosen. And do mention the war.

David Allen Green argues that the EU made a grave mistake by insisting on the so-called Irish “backstop” as a pre-condition of ending the first phase of negotiations. The brutal truth is they may now fail to strike an agreement in time for the UK’s March 2019 departure.

What you’ve been saying

Enough of those like McConnell who put party before country: letter from Lillian Clementi, Arlington, VA, US

I am an admirer of Janan Ganesh, but I have to disagree with his latest column, “Democrats need their own McConnell”. As a woman without a party, I will cheerfully agree that the Democrats are overly idealistic and politically inept, and that Senator Mitch McConnell displays an admirable command of the sausage-making machinery. But as far as I can tell, the gentleman from Kentucky never misses an opportunity to put party before country, and we sure as hell don’t need more of that.

In response to “Trump’s dangerous reliance on Saudi Arabia”, Vortex09 says:

Looks like Canada’s foreign minister [Chrystia Freeland] was the canary in the coalmine way back in August when she infuriated Saudi Arabia.

Simply ask: does the market cap make sense?: letter from Nicholas Malins-Smith, Cambridge, UK

Patisserie Valerie’s recent problems and the claim that “nobody could have seen this coming” may be true, but it highlights one simple check that is available to all investors (in the UK small-cap space) when deliberating about a company’s future prospects. It is to simply ask (ignoring all the other usual financial metrics): “What is the current market capitalisation and does it make sense?”

Today’s opinion

German elections: top tips for the chattering classes
Anglophone social media is abuzz with insights into the country’s political dynamics

Lex: Meggitt: plane truth
Clear skies for aerospace group but higher fuel prices pose threat

Politics puts the skids under bull market
The economic tussle between the US and China risks dragging down the world

Inside Business: Winter arrives for Chinese tech companies
Investors who have not harvested returns are facing discomfort

The EU might have made a grave mistake with the Irish ‘backstop’
Concerns about the border in Ireland could and should have been dealt with separately

Lex: Groupon: no big deal
Business looks more durable but not all the numbers hold up to scrutiny

Jimmy Carter’s lesson for Donald Trump: hands off the Fed
The former president was selfless in his arm’s-length relationship with US central bank

FT Wealth: Would you turn down £1bn? Why some people don’t want to inherit
Rich families often define themselves via their philanthropic trusts

FT View

The FT View: In the M&A market, this time really might be different
There are signs investors are getting better at punishing bad deals

The FT View: A chance for Turkey and America to rebuild ties
The release of pastor Brunson offers an opportunity for diplomacy

The Big Read

The Big Read: US midterms: a referendum on Donald Trump
Republicans hope buoyant economy will be a bulwark against Democrats energised by opposition to the president