Week in review: All aboard the gloom train?

This week: a bleak forecast for the UK economy, NASDAQ shows its FANGs and a piggy in the middle of a city.

The UK’s Office for Budget Responsibility (OBR) struck a sour note this week when it warned that there were “nasty fiscal surprises” ahead. In its Fiscal Risks Report, the spending watchdog barked a warning to the government that considerable clouds are looming.

The OBR has undertaken a “stress test” of the public finances to model the effects of an economic downturn. The result? A resounding fail. Describing the potential fiscal effects as “severe,” the OBR warned that the deficit would rapidly rise in the event of a recession.

And Brexit could well make things worse. The OBR noted that even a small drop-off in economic activity could have a big impact on the public purse. In comparison with a fall in Britain’s underlying growth rate caused by reduced European trade, any “divorce bill” paid to the European Union (EU) would pale into insignificance.

All of this comes at a time when “austerity fatigue” is all too evident in the UK – and increasingly acknowledged by politicians. But the OBR warned that “unfunded “giveaways” would “only add to the longer-term challenges.” And as if that wasn’t enough bad news for Britain, Andy Murray crashed out of Wimbledon too.

Blowing off the blues

But despite the economic and sporting gloom, investors in UK shares were in much sunnier mood. The FTSE 100 was up 0.85% at Thursday’s close, with mining stocks in the lead. Among the top performers were Glencore, Antofagasta and Anglo American, as the prices of copper and iron ore rose.

Global rally reaches new heights

The UK market’s strength and health was a part of a worldwide trend. Global stock markets reached a record high, with the S&P 500 Index up 0.95% by the end of Thursday and the FTSE World Europe ex UK Index up 1.8%. In Japan, the Topix Index reached a two-year high on Tuesday, before slipping back later in the week as the yen strengthened.

The global euphoria was in large part due to comments by U.S. Federal Reserve (Fed) Chair Janet Yellen in her testimony to a Congressional panel on Wednesday. Yellen said that the U.S. central bank was not constrained by a set timetable for tightening monetary policy, and that rate rises could be postponed if inflation remained low.

The NASDAQ shows its FANGs

After recent concerns about a bubble, the tech sector was very much back in favor this week. All of the so-called FANG stocks – Facebook, Amazon, Netflix and Google – rallied robustly.

The rally came as anticipation about the forthcoming earnings season heated up. There was also some excitement about the launch of a new exchange-traded fund with the ticker FNG and a mandate to hold “disruptive innovators” such as the FANGs.

Trump tripped up?

It’s the gift that keeps on giving – for Washington-watchers at least. This week, we got another twist in the convoluted saga of potential Russian involvement in the U.S. election. The president’s son, Donald Trump Jr., released emails revealing that he met a Kremlin-linked lawyer to discuss potentially damaging information about Hillary Clinton obtained by Russian sources. “I love it,” said Trump Jr. at the time – although he denies having told his father.

Much ink has been expended on whether the revelation is a “smoking gun” that could lead to the president’s impeachment or merely further fireworks as the saga unfolds. In any case, U.S. markets have taken the story in stride, with the Dow Jones Industrial Average at an all-time high on Thursday. Shares in popcorn, anyone?

And finally…

There was a piggy in the middle this week – the middle of a city. Alarm arose after police in Gloucester, England, tweeted a CCTV snap of a porcine intruder roaming the city center at night. The online audience swiftly identified the hirsute hog as a bona fide wild boar.

As a colony of wild boar roam the nearby Forest of Dean, this seemed perfectly plausible. And worrying, too, given the breed’s aggressive nature and troublesome tusks. “They can disembowel you,” warned one concerned tweet, urging the public to avoid the swinish suspect.

Within 24 hours, however, the precocious porker had been lassoed and taken into police custody. Rather than a fearsomely tusked beast, the captive turned out to be a sweet-natured Vietnamese pot-bellied pig. What an attention hog.