Euphoric markets are ignoring growing political risks

THE PAST year has brought war to the Middle East, escalation of the trade conflict between the West and China and, on July 13th, an attempt to kill the frontrunner in America’s presidential race. But if you look at financial markets, you’d think nothing was amiss. No amount of blood or political rancour, it seems, can distract Wall Street from the good economic news: that fears of recessions have so far proved wrong, and that inflation has nonetheless tumbled. As a result markets are at, or close to, all-time highs in America, the euro zone and Japan, and many emerging-economy stocks are booming, too. Optimism is rife. Compared with companies’ profits, America’s stocks have only ever been this pricey during two previous booms.