If you’re going to play inTexas, you gotta have a fiddle in the band.

This week, London is plagued by tube strikes, making it almost impossible to travel anywhere, as the drivers protest for shorter working hours. Call me an old cynic, but by reducing the number of hours worked, they merely extend the period they can claim as overtime. You can see the impact it has on businesses; restaurants will struggle to attract customers, and staff will find it challenging to get to work, as will shop owners and workers. Meetings are delayed or cancelled. Surely it can’t be long before we see driverless trains.

Moving on to more mundane matters, longer government bond yields in France and the UK have remained steady over the past few days despite the loss of a confidence vote in France and the recent political turmoil in the UK. These events have not led to a further decline in prices and higher yields; if anything, UK and French longer-dated yields have marginally declined recently. Once again, reminding investors that the market tends to get there ahead of the news.

Gold has been a hot topic in recent weeks. John Arthurs penned an interesting take on the rise to new records for the yellow metal. I have attached the link. Gold, Nasdaq Both at Record Highs, But Bullion Has More Steam – Bloomberg. The article puts the bull case for gold, but all studies show gold underperforms stocks in the long term. Over the past hundred years, the compounded returns on global developed markets have been almost twice those of gold. I will always find it hard, personally, to own a negative-yielding asset. But for many, owning gold is a must in their portfolio.

Yesterday, more employment data suggested further weakness in the US economy. The latest revision to the official non-farm payroll data foundthat jobs were over-counted by 910,000in the 12 months to March. Equity investors appear unfazed by the recent weakness in the employment data as they continue to support equities on expectations that this weakness increases the chances of rate cuts. The old, bad economic news is good news for the stocks theory. The strength of the rally since April has only been matched twice in modern history, post-GFC and post-COVID; the falls in both cases were deeper. Whether the strength in the recovery should put fear into your hearts for asset prices or hope for further gains makes for an interesting debate.

Over the next couple of days, we will get the data for the other side of the interest rate equation, today producer price inflation and then tomorrow, the monthly Consumer Price inflation data. Consensus is for a rise in US inflation from 2.7% year over year to 2.9% year over year. Whatever the outcome, a 25 basis point cut next week is nailed on; one would imagine a weaker than expected CPI would lead to increased speculation of 50 basis points.

This morning, equity markets in Europe remain on the front foot, despite what appears to be an increase in geopolitical risks in the Middle East and Ukraine. Yesterday was the second time in three months that Qatar found itself on the receiving end of incoming missiles, as Israel targeted Hamas leaders based in Doha. We wake up to the news that Poland has “downed” Russian Drones in its airspace. The oil price has risen, but only marginally.