“If bad news is great for stocks, then is good news bad?”
Bank of America reminded us earlier that just this month, the PBoC cut rates, the ECB confirmed QE2, Sweden announced additional QE, and the BoJ promised additional easing if necessary ‘without hesitation’, and for markets, “the stimulus of October 2015 has worked, with equities and corporate bonds rallying hard.”
The main driver of this newly unleashed central bank intervention? Terrible global economic data.
BofA further says that “central banks are easing because global growth is weak” (in the process making global growth even weaker but at least pushing risk assets to new highs) adding that “global profits are down 4% since February. Even the US has struggled: payroll growth has decelerated and the latest US GDP growth rate was a pitiful 1.5% in Q3. And the level of US inventories is unambiguously recessionary.”
But while “confidence in quantitative success for the economy is nonetheless low” the ‘loss of faith in central planning’ trade which emerged briefly in late August and September, promptly fizzled as “don’t fight the Fed” once again regained its top position on the pantheon of Wall Street aphorisms, right above BTFD.
This post was published at Zero Hedge on 11/01/2015.
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