We’re are all doomed, Captain Truss
As Ms Truss gets started as Prime Minister, its seems that there is nothing but a gloomy few months to look forward to in Britain. Investors are certainly taking that view because I read that nearly £7 billion has been withdrawn from UK focused investment funds this year (Source: FT).
Of course, the withdrawals might be all by UK investors scared of markets (amateur investors always withdraw money when markets have fallen sharply, according to most research) but it is likely that some of that money has been re-allocated elsewhere by international investors. A recent international bank economic forecast had the UK as the most likely region of the world to suffer a recession.
To a degree, none of the above is evidence of anything concrete – it is just behavioural. However, the human psychological behaviour of market participants is, in my view, the main driver of market valuations.
Economics is only of relevance insofar as it puts some words and fairly naive theory around the living conditions (especially financial aspects) of us all and that might help predict our behaviour!