Geopolitics and Markets Review 5th September 2022:

11 things happening in the world of geopolitics and the financial markets.

Good morning. Happy Labor Day to those over in The US.

UK Prime Minister race ends today, with Liz Truss expected to win the vote. Last week, Goldman Sachs forecast that we could see 22% inflation by the end of the year forecast. Whoever is the next PM has a tough job ahead. Why is the financial situation so bad? Rising energy costs are the main reason as Ofgem, could increase the energy bill price cap by 80% in January. Ofgem is the government office for gas and electricity markets in the UK. Natural gas prices continue to rise due to the decreasing flows of Russian supply into the European markets. Over 30 suppliers have gone bankrupt from the rising price to buy energy wholesale. Their customers have been passed on to other companies.

CPI doesn’t track food and energy. This means the 10.1% year-over-year increase in UK inflation doesn’t include these two aspects. Food and energy are the largest contributors to inflation. Scary.