FOOT TO THE FLOOR, HERE WE GO!
In the space of 6 weeks, the US Fed has gone from steady as she goes, 3 rate hikes to go in 2019, to considering policies so extreme that they weren’t used in the greatest financial crisis of the last 80 years.
6 weeks!!
Shredding all remaining market credibility, in our irrelevant opinion. Peter Schiff (Euro Pacific) now likens the US Fed Reserve committee to a bunch of 5 year olds debating how Santa gets all the presents to everyone each year.
Or, so terrified they may be at pricking any one of the prevailing bubbles, they just decided to crank it all up again, like their recent predecessors.
Doesn’t matter. What matters is, by way of recently referencing (US Fed Vice Chair Clarida) the Bank of Japan’s “leadership” in monetary policy, we can assume some of the soon to be announced policies to include:
- Negative Interest Rate acceptance.
- Shock and Awe QE, suppression of Bond rates.
- Straight up buying stocks and ETF’s.
And what have equity markets thought of all this? They love it.
The Australian All Ords index certainly likes it.
Some may argue the possibility of a quadruple top in the US S&P, exhibited in the 4 month chart below, but “they” must truly not understand Modern Monetary Theory (MMT)
MMT, if you’re unfamiliar, is a “new” way to pay for ALL THE THINGS, without consequence.
From a “soon to be elected” global socialist movement perspective, it looks like this.
Nothing to see here, folks. Everybody move on. No consequences. At all.
And worrying about the type of inflation that can’t be hidden by bureaucratic wonks, “real inflation”, it isn’t happening.
Hyperinflation is not recognised as a word anymore.
For the more “out there”, thinking type voters, the scary thing is, globally, central banks have already abandoned any pretence of normalising monetary policy.
The ECB (Europeans) is/are already talking about MORE monetary easing, less than 8 weeks after ending its last one.
BOJ (Japan) announced it will NOT be tapering its multiple QE programs and may do even MORE if the Yen rises too much.
And the Chinese, well, the most recent $600 BILLION infusion looks like this:
Could all this be the reason Central banks are buying gold at their fastest rates since Nixon closed Gold Window?
Some have even sold “high quality paper” for gold completely!! A by-product of effective US sanctions, no doubt! Uncle Remus, is that you?
Increasing Global central bank support, to a financial system continually in need, as it has been since 2009, remains the most important consideration to investors and markets.
Following this round of MMT, the next round will be so enormous you still have time to get your portfolio in order with some inflation protection.
But don’t forget, the reason for this unprecedented and increasing support for financial markets is, at its heart, its fragility. Just one event away!!
Of course, we’re probably over thinking it.
In the meantime, your portfolio inquiries are always welcome.
