{"id":23896,"date":"2017-05-07T10:45:14","date_gmt":"2017-05-07T15:45:14","guid":{"rendered":"http:\/\/olduvai.ca\/?p=23896"},"modified":"2017-05-07T10:45:14","modified_gmt":"2017-05-07T15:45:14","slug":"a-problem-emerges-central-banks-injected-a-record-1-trillion-in-2017-its-not-enough","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=23896","title":{"rendered":"A Problem Emerges: Central Banks Injected A Record $1 Trillion In 2017… It’s Not Enough"},"content":{"rendered":"

A Problem Emerges: Central Banks Injected A Record $1 Trillion In 2017… It’s Not Enough<\/a><\/h3>\n
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Two weeks ago Bank of America caused a stir when it calculated <\/a>that central banks (mostly the ECB & BoJ) have bought $1 trillion of financial assets just in the first four months of 2017, which amounts to $3.6 trillion annualized, “the largest CB buying on record<\/a>.”\u00a0<\/strong><\/p>\n

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BofA’s Michael Hartnett noted that supersized central bank intervention which he dubbed a “liquidity supernova” is “the best explanation why global stocks & bonds both annualizing double-digit gains YTD despite Trump, Le Pen, China, macro…”<\/p>\n

To be sure, Hartnett’s “discovery” did not come as a surprise to regular readers: back in October 2014, Citi’s Matt <\/a>King calculated that it\u00a0costs central banks $200 billion per quarter to avoid a market crash<\/strong>, or as he put it:<\/p>\n

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For over a year now, central banks have quietly being reducing their support. As Figure 7 shows, much of this is down to the Fed, but the contraction in the ECB\u2019s balance sheet has also been significant. Seen from this perspective, a negative reaction in markets was long overdue: very roughly, the charts suggest that zero stimulus would be consistent with 50bp widening in investment grade, or a little over a ten percent quarterly drop in equities. Put differently, it takes around $200bn per quarter just to keep markets from selling off.<\/strong><\/div>\n<\/blockquote>\n

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Today we showed just what central bank buying looks like in practical terms when we demonstrated <\/a>that the Swiss national Bank had purchased a record $17 billion in US equities in just the first quarter, bringing its total US equity long holdings to an all time high above $80 billion…<\/p>\n

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… in the process soaking up nearly 4 million AAPL shares in the first 3 months of the year.<\/p>\n

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…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/section>\n","protected":false},"excerpt":{"rendered":"

A Problem Emerges: Central Banks Injected A Record $1 Trillion In 2017… It’s Not Enough Two weeks ago Bank of America caused a stir when it calculated that central banks (mostly the ECB & BoJ) have bought $1 trillion of financial assets just in the first four months of 2017, which amounts to $3.6 trillion […]<\/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":[39,49,3038,57,85,124,233,282,4318],"class_list":["post-23896","post","type-post","status-publish","format-standard","hentry","category-economics","tag-assets","tag-balance-sheet","tag-bank-of-america","tag-bank-of-japan","tag-boj","tag-central-banks","tag-ecb","tag-european-central-bank","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23896","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=23896"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23896\/revisions"}],"predecessor-version":[{"id":23897,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23896\/revisions\/23897"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=23896"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=23896"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=23896"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}