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The great divide

The world’s polarisation, weather extremes and black and white contrasts are probably nowhere more evident than in California these days. The pandemic hit late but hard and everyday life remains meaningfully constrained with the social and economic toll rising by the day. As US elections heat up, the political rift deepens.




Just when society needs swift, considered and unbiased decision-making, emotions and political attitudes take precedence over everything. This zeitgeist is particularly evident in California. Yet Silicon Valley remains the epicentre of the crisis recovery from a financial market perspective, with big technology names being the key force behind the stock market rebound. Add to this weather extremes, with ravaging wild fires and an overwhelmed power grid that left millions of Californians in the dark. Climate change and weather extremes are partially to blame, but even more so are insufficient planning, governance and technology deployment.

What can we make of this?
Not sure – these observations are already fascinating enough. But this great Californian divide will leave its scars and influence Big Tech through its employees’ mindsets and corporate culture. Being exposed to too much polarisation and looking into a too deep divide is not what keeps you fit for the future.

We still believe that the economic recovery will bring ‘good’.

Norbert Rücker, Head of Economics & Next Generation Research

What else?
Central bankers will meet for the Jackson Hole Symposium – of course, virtually. This gathering will be a top focus of the week given the financial markets’ fear of ‘bad’ inflation, i.e. monetary debasement. The central banks will show even more comfort with inflation overshooting, but remember that inflation targets are not inflation forecasts. We still believe that the economic recovery will bring ‘good’, i.e. cyclical, inflation.