One obvious strategist says the market is literal and figurative. Albert Edwards, a global strategist in Société Générale, warned Thursday that stock markets become "stoned for free money," leaving them "apart from reality." There is a condition in which the strategist could finally say "fatal testing".
The US equity benchmarks – and those around the world – have retreated the sale of end-2018 sales that ended in one of the worst results in December, but said Edwards, in a Junior note, said those earnings had been greatly supported by central banks that "ready to spray another dosage of euphoria in its marketplace."
Indeed, since December 24 was low last year, Dow Jones Industrial Average
to the index S & P 500
Both have developed by around 20%, while the Nasdaq Compound Index
has returned approximately 23%, to date, from trading on Thursday, according to FactSet data.
The resolution of war-tensions between the US and China has helped repay stocks, but the Federal Reserve policy in January may present the most significant change in an investor feeling over the last few weeks.
Fede, led by the Chairman, Jerome Powell, said he would be more patient in assessing future rate movements, and the January collection records released on Wednesday said his efforts to reduce an asset portfolio of $ 3 billion could come to the collection as early as the end of 2019. Both policy strategies, raising interest rates and drainage of the asset portfolio, have been considered to be the foremost for markets, reminding excessive financial conditions.
Edwards, well-known for his persistent pessimistic views on the global economy and markets, signs of more trends of accommodation from the Fed, and more recently the European Central Bank, who was said to be thinking about regenerating a plan A further impetus to the European banking sector, known as a targeted longer term refinancing act, or TLTRO, is the source of its concern (see section below):
All major Central Banks in the world have made it a bit to spray another dosage of euphoria in its market circle. Y Fwyd was the most visible and most prominent seller, biting the block and turning heads with screwing sound and turn-in turns but pulled it. But other key central banks also appear to be ready to protect their financial wound, with ECB board members talking about the reintroduction of TLTRO, Kuroda's promising Japan Senate Kuroda Governor would provide more QE if necessary, and finally, the PBoC allowed a dash of $ 480 billion bank loans in January.
Edwards brings to the conclusion that an investment community that could be raised on financial opioids can nurture bubbles in the financial system. That is, he believes that the inability of central bankers to bring easy money policies put in place to tackle the financial crisis of 2007-09 could lead to increased risk of risk at Wall Street that could lead to a new crisis
Overall, the Federation has said that its pivot is based on the belief that its policies create "cross-cutting" in financial markets that could lead to damage to the economy and find Evidence of software in economies outside the US
Read: Patients & # 39; feeds to wait and see a situation as the worries about the economy grow
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