Did Everything Just Change?How material are this week’s QE & China deal announcements?
It’s hard to imagine a more euphoric end to the week for bulls.
Two weeks ago I issued a report titled Realistically, What’s Left To Power Asset Prices Higher? which claimed the bulls only hope was for a near-term resumption of QE (quantitative easing, aka “money printing”) or a China trade deal.
Well, this week they got both.
Jerome Powell announced Wednesday that the U.S. Federal Reserve will resume expanding its balance sheet to the tune of $60 billion per month. And just a few hours ago, the Trump administration announced it had reached a partial trade agreement with its Chinese counterparts.
And to put a cherry on top of things, word from across the Pond is that somehow a Brexit deal just might happen by the end of the month.
When I began typing this article earlier today, the markets were fiercely building towards an orgiastic climax. They ended with a slight post-coital breather, closing modestly off the day’s highs.
In short, the bulls are suddenly having the time of their lives.
So, does this mean happy days have returned? Have we been rescued from the rising tide of data warning of an economic slowdown and lower asset prices? Does the Fed — and now China, too — have our back again?
Is it time for investors to become optimistic once more?
“”Markets”” No More
Before we answer that, though, let’s address the elephant in the room. We no longer have functioning financial markets.
The central banking cartel has killed price discovery. The $15+ TRILLION in liquidity injected by the Fed, EBC, BoJ, BoE and PBoC over the past decade has ‘risen all boats’ when it comes to asset prices.
Whether great, mediocre, or horrible, the price of nearly every company/property/investment has been on a one-way 45-degree ramp upwards since global co-ordinated quantitative easing began in 2009.
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