{"id":49872,"date":"2019-11-29T10:13:20","date_gmt":"2019-11-29T15:13:20","guid":{"rendered":"https:\/\/olduvai.ca\/?p=49872"},"modified":"2019-11-29T10:13:25","modified_gmt":"2019-11-29T15:13:25","slug":"central-bankers-panic-over-exuberant-financial-market-fragility-warn-risks-are-underestimated","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=49872","title":{"rendered":"Central Bankers Panic Over Exuberant Financial Market &#8220;Fragility&#8221;, Warn Risks Are &#8220;Underestimated&#8221;"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/www.zerohedge.com\/markets\/central-bankers-panic-over-exuberant-financial-market-fragility-warn-risks-are\">Central Bankers Panic Over Exuberant Financial Market &#8220;Fragility&#8221;, Warn Risks Are &#8220;Underestimated&#8221;<\/a><\/h3>\n\n\n\n<p><strong>You know it&#8217;s bad when&#8230;<\/strong>&nbsp;even the central bankers are warning that the monster they&#8217;ve created is out of control.<\/p>\n\n\n\n<p>As stocks have exploded higher in the face of declining earnings&#8230;<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com\/s3fs-public\/inline-images\/bfm8368.jpg\" alt=\"\"\/><figcaption><em>Source: Bloomberg<\/em><\/figcaption><\/figure>\n\n\n\n<p>And collapsing macro-economic data&#8230;<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com\/s3fs-public\/inline-images\/bfmD8A.jpg\" alt=\"\"\/><figcaption><em>Source: Bloomberg<\/em><\/figcaption><\/figure>\n\n\n\n<p>Policy makers from the world&#8217;s central banks are suddenly raising cautionary flags at the potentially unsafe investing environment stoked by their efforts to flood economies with ultra-cheap money.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>\u201cWhile vulnerabilities related to low interest rates have the potential to grow, thus calling for caution and continued monitoring, so far, the financial system appears resilient\u201d &#8212;&nbsp;<a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2019-11-15\/fed-warns-prolonged-low-interest-rates-could-spark-instability\">Federal Reserve<\/a>, Nov. 15.<\/li><li>\u201cVery low interest rates, coupled with the large number of investors which have gradually increased the duration of their fixed income portfolios, could exacerbate potential losses if an abrupt repricing were to materialize\u201d &#8212;&nbsp;<a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2019-11-20\/ecb-flags-risks-to-financial-stability-from-its-own-stimulus\">ECB<\/a>, Nov. 20.<\/li><li>\u201cThis type of environment can lead to an increase in risk\u2010taking, to assets being overvalued and to indebtedness increasing in an unsustainable manner\u201d &#8212;&nbsp;<a href=\"https:\/\/www.bloomberg.com\/news\/terminal\/Q19NQRDWRGG1\">Riksbank<\/a>, Nov. 20.<\/li><li>\u201cMany investors are focused on the search for yield and could be tempted to take on greater risk\u201d &#8212;&nbsp;<a href=\"https:\/\/www.bloomberg.com\/news\/terminal\/Q1BCMCSYF01S\">Bundesbank<\/a>, Nov. 21.<\/li><\/ul>\n\n\n\n<p>Most notably,&nbsp;<a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2019-11-27\/global-risk-taking-binge-gives-central-banks-cause-to-shudder\">Bloomberg reports&nbsp;<\/a>that the spate of recent financial stability assessments began Nov. 15 with the Fed, which warned that low rates could encourage riskier behavior such as eroding lending standards.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><em><strong>A prolonged period of low rates could also \u201cspur reach-for-yield behavior, thereby increasing the vulnerability of the financial sector to subsequent shocks,\u201d<\/strong><\/em>&nbsp;it said.<\/p><\/blockquote>\n\n\n\n<p>However,&nbsp;<a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2019-11-27\/global-risk-taking-binge-gives-central-banks-cause-to-shudder\">as Bloomberg notes,<\/a>&nbsp;despite central banks\u2019 qualms about side effects, there\u2019s little sign that they\u2019ll do any more than issue warnings.&nbsp;<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><em><strong>\u201cThe Fed since September, the ECB as well, the BOJ, even the central bank of China is starting to provide some more easing,\u201d<\/strong><\/em>&nbsp;Kevin Thozet, an investment strategist at Carmignac Gestion, told Bloomberg TV on Wednesday.<\/p><p>That\u2019s contributed to \u201c<strong>a bull market of everything in 2019<\/strong>.\u201d<\/p><\/blockquote>\n\n\n\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n\n\n\n<p><a href=\"https:\/\/www.zerohedge.com\/s3\/files\/inline-images\/bfmD8A.jpg?itok=WWSY8HO8\"><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Central Bankers Panic Over Exuberant Financial Market &#8220;Fragility&#8221;, Warn Risks Are &#8220;Underestimated&#8221; You know it&#8217;s bad when&#8230;&nbsp;even the central bankers are warning that the monster they&#8217;ve created is out of control. As stocks have exploded higher in the face of declining earnings&#8230; And collapsing macro-economic data&#8230; Policy makers from the world&#8217;s central banks are suddenly [&hellip;]<\/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":[124,4755,303,1849,534,4318],"class_list":["post-49872","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-corporate-earnings","tag-fed","tag-financial-markets","tag-monetary-policy","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49872","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=49872"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49872\/revisions"}],"predecessor-version":[{"id":49873,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49872\/revisions\/49873"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=49872"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=49872"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=49872"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}