One prominent strategist says that the market is high literally and in a figurative sense. Albert Edwards, a global strategist at Société Générale, warned Thursday that stock markets are "clogged up with free money," leaving them "torn off from reality." This is a condition that, according to the strategist, "may prove fatal". 19659002] US landmarks – and those around the world – came back from sale at the end of 2018, culminating in one of the worst December earnings in recent years, but Edwards says that on Thursday, these profits were largely aided by central banks, ready to "introduce another dose of euphoria into the market".
In fact, since December 24 last year, the Dow Jones Industrial Average
and the S & P 500 index
increased by about 20%, and the Nasdaq Composite Index
turned around 23% today, as on the trading side of Thursday, according to FactSet. a rebound, but the political turning of the Federal Reserve in January may have brought the greatest change in investor sentiment in recent weeks.
The Fed, headed by Chairman Jerome Powell, said he would be more patient in evaluating future rates changes, while the January meeting reports released on Wednesday showed that her efforts to reduce the portfolio of assets to $ 4 trillion. Both policy strategies that raised interest rates and reduced the portfolio of assets were seen as barriers to markets, which unjustifiably exacerbated financial conditions.
Edwards, known for his consistent pessimistic views on the world economy and markets for more favorable Fed trends, and recently the European Central Bank, which is said to be thinking of reviving a further stimulus plan for the European banking sector, is known as a targeted long-term operation Refinancing, or TLTRO, is a source of his concern (see the following passage below):
major Every major central bank in the world has contributed to the introduction of a different dose of euphoria in the market. The Fed was the most prominent and dominant dealer, a cruise block and a turning head with a cry of the sound of the turn of the handle, he simply pulled out. But other key central banks also seem to be prepared to protect their money circulation, as members of the ECB Board of Governors are talking about the resumption of the TLTRO, promising the Japanese Parliament of Governor BoJ Kuroda, who will, if necessary, provide a larger QE, and finally, the PBoC will achieve a record 480 USD billion USD bank loans in January.
Edwards concludes that the investment community attached to monetary opioids can contribute to the development of bubbles in the financial system. That is, he believes that the failure of central bankers to complete the policy of easy money that was introduced to resolve the financial crisis of 2007-09 could lead to increased risks on Wall Street, which could lead to a new crisis.
For its part, the Fed said that its turn is based on the conviction that its policy creates "cross-flows" in financial markets, which can lead to damage to the economy and come against the backdrop of evidence of quality in economies for outside the US
Read: & # 39; Patient & # 39; Fed takes position of expectation and date because it worries about economic growth
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