Energy remains the most reliable cyclical sector in the macro toolkit, and it is currently doing what it always does at this point in the cycle: topping out. Petrol and diesel prices may have visited what one might generously describe as the banana zone, but they will roll over. They always do. The laws of demand destruction are not suspended simply because the pump price is uncomfortable. The one scenario that would put genuine cracks in this thesis is a coordinated fiscal intervention, governments reaching for the chequebook and distributing cash equivalents directly to consumers. -> That would be inflationary. 🔥 Germany's apparent intention to cap petrol prices is a case in point, and a cautionary one. Price caps do not solve energy market imbalances. They merely postpone them, while simultaneously removing the very price signal that would otherwise incentivise consumers to adjust behaviour and the market to correct itself. Governments that cap prices are, in effect, paying for the problem to continue a little longer while describing it as a solution. The market, left to its own devices, would reset the system rather more efficiently.