The helipads around the world are about to get busier.
That’s the central bankers of the world jawboning about “helicopter money coming soon from Japan, Europe and even in the US, while the UK cuts its prime lending rate and perhaps launches a new round of easing.
Does this sound like things are going well and that the equity markets should be making all-time highs? Yup, welcome to the new world.
It all starts at roughly 5PM in NYC. Futures markets are down for the Dow, S&P and Asia while precious metals are rising. In Asia the markets look very soft on a strengthening yen.
The Bank of Japan puts out a — what seems like a daily statement saying that the government will be in the market “to protect” the yen, which really means BOJ wants a weaker, not stronger yen. When it came close to 100 yen to the dollar on the Fx exchanges due to Brexit, that was too strong.
And we use to laughed at Mexico, when on vacation the peso felt like monopoly money at 25 pesos to the dollar. Whose the third-world country now?
So what does the Bank of Japan suggest during a visit by ex-Fed chief (Helicopter) Ben Bernanke? To give cash to the general population to spur spending, which may spur growth.
Asian stock markets soar, Europe can’t wait to open and US futures rise, bond yields rise, precious metal sink. Got it, ok we’ll do it again tomorrow night.
So now, we still have Deutsche Bank and many Italian banks teetering. We have a Bank of England starting a Quantitative Easing program. And we have a Federal Reserve still divided on want to do this month with rates?
So the short answer is: In a world awash with debt, let’s created more debt — albeit at a very low-interest rates — to get out of this quagmire called stagflation.
Doesn’t sound to me like equities are on a long-term growth cycle to me, but it is election time here in the US, so all bets are off.