Populism is a massive threat to markets. Inflation, tax-hikes, petrol costs, poverty, political mismanagement and a host of other failings could further destabilise the West, while markets seem determined to stay euphoric whatever the evidence to the contrary.  

After a week out of markets, I'm back at my desk trying to make sense of it all – it's not a pretty picture. There are reasons to be concerned, but as ever, remember: "Things are never as bad as you fear, but seldom as good as you hope."

Back in the real world, my Threat Board is flashing multiple red danger signs – but we can't worry about everything. We need a triage process to strip out what will be painfully real as opposed to simply real. As I spent today catching up on an improbable number of emails… I'm thinking about the following priorities likely to swing  market sentiment:

European politics and populism

Energy and Food Inflation

China Covid Lockdowns and Supply Chains

Euphoric markets

European Elections:

Don't discount European Populism. European Energy inflation, (especially the critical signal to be given by the German inflation number), food insecurity, rising poverty and a looming recessionary threat will be a fertile breeding ground for populism this summer. In 2 weeks we will likely experience the European equivalent of a political meteor near-miss.

The timing of the French elections has been stupendously lucky for Emmanuel Macron. He will likely beat Marine Le Pen by a slim 3-4% margin.