{"id":11482,"date":"2015-08-26T09:29:03","date_gmt":"2015-08-26T14:29:03","guid":{"rendered":"http:\/\/olduvai.ca\/?p=11482"},"modified":"2015-08-26T09:32:26","modified_gmt":"2015-08-26T14:32:26","slug":"11482","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=11482","title":{"rendered":"“Central Bankers Look Naked… & Investors Have Nothing Else To Believe In”"},"content":{"rendered":"

“Central Bankers Look Naked… & Investors Have Nothing Else To Believe In”<\/a><\/h3>\n

Via RBS’ Alberto Gallo,<\/em><\/p>\n

\n
“Policymakers responded to the financial crisis with easy monetary policy and low interest rates. The critics \u2014 including us \u2014 argued against ‘solving a debt crisis with more debt.’ Put differently, we said that QE was necessary, but not sufficient for a recovery.\u00a0We are now coming to the moment of reckoning: central bankers look naked, and markets have nothing else to believe in.<\/strong>“<\/div>\n<\/blockquote>\n

The Emperor Is Naked…<\/p>\n

\"\"<\/a><\/p>\n

As The FiscalTimes details<\/a>,<\/em><\/p>\n

\n
Gallo believes an\u00a0overreliance on excess liquidity has actually hindered capital investment<\/strong>\u00a0\u2014 as companies have focused on debt-funded share buybacks and dividend hikes instead \u2014\u00a0limiting the global economy’s potential growth rate.<\/strong><\/div>\n

Now, contagion from China \u2014 lower commodity prices, lower demand, currency volatility \u2014 has revealed the structural vulnerabilities.\u00a0More stimulus,\u00a0in his words<\/a>, “could be self-defeating without fiscal and reform support.”<\/strong><\/p>\n

As for Fed hike timing,\u00a0Gallo sees the odds of a September liftoff at just 30 percent,\u00a0<\/strong>down from 36 percent last week, based on futures market pricing. December odds are at 60 percent.<\/p><\/blockquote>\n

The open question is:\u00a0<\/strong>Should the Fed delay its rate hike and the People’s Bank of China ease, will stocks actually rebound? Or has the Pavlovian reaction function been broken by a loss of confidence? We’re about to find out.<\/em><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

“Central Bankers Look Naked… & Investors Have Nothing Else To Believe In” Via RBS’ Alberto Gallo, “Policymakers responded to the financial crisis with easy monetary policy and low interest rates. The critics \u2014 including us \u2014 argued against ‘solving a debt crisis with more debt.’ Put differently, we said that QE was necessary, but not […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[130,7583,534,2615,670,2773,4318],"class_list":["post-11482","post","type-post","status-publish","format-standard","hentry","category-economics","tag-china","tag-futures-market","tag-monetary-policy","tag-peoples-bank-of-china","tag-recovery","tag-volatility","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11482","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11482"}],"version-history":[{"count":3,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11482\/revisions"}],"predecessor-version":[{"id":11485,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11482\/revisions\/11485"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11482"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11482"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11482"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}