Mario Draghi announced the ECB reducing their bond purchases, which will be HALVED in January to just $35 billion. Couple that with the Fed balance sheet reduction program, there is a concerted effort to enact DEFLATIONARY policies worldwide.
Anyone remember when markets would chimp out at the notion of ending QE? Not only is QE ending, but the balance sheets are being reduced — yet stock are still trading higher.
This is good news for markets.
But can it last?
The training wheels are off and there hasn’t been dislocations thus far. The euro is getting absolutely ruined on this news — off by 1.4% v the dollar. The decline in the dollar, hitherto, has been a boom for exporters attempting to MAGA with their goods. If we’re on the other side of the mountain, this could be yet another meaningless bullet point for bears to cling onto, attempting to scare people out of greatness.
Who knows how stocks are trading higher? Perhaps robots.
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“But can it last?”
A while still. The story going forward, … the >> $ << .
I think we should ask Showtime, sacrilege, and Iron Bird why the markets arnt trading lower. They seem to know.
A few reasons: Not only the FED and ECB have zero credibility, they say one thing and do another. Didn’t the FED increase its balance sheet by $15B just last week? They did. So market going up should not be a surprise here. Also, it’s not just about FED/ECB. The capital flows are global. It’s worse elsewhere and US stocks look better. Furthermore, is the FED reinvesting its “profits”? Maybe/probably; thus, stocks up. So, short-term -> stocks up, long-term? Down; if FED actually continues balance sheet reduction…much lower down.
“good news for markets”
You wall st morons never change (belly laugh)
levels into thinner and thinner-air alongside reductions (&reversals) on support mechanisms
¨ Just last week the Fed increased their balance sheet by over $13.5 billion dollars¨
https://goo.gl/eCT2je
Maybe we are not there yet.
Why deflation? I thought they wanted inflation!