BofA: Even The Bubbles Are Becoming More “Bubbly” Thanks To Central Banks

Jon Economy

Back in June, Citi’s credit strategist Hans Lorenzen pointed out that while QE had failed to spark inflation across the broader economy, it had achieved something else: “the principal transmission channel to the real economy has been… lifting asset prices.” That however has required continuous CB balance sheet growth, and with the Fed, ECB and BOJ all poised to “renormalize” over the next year, the global monetary impulse is set to turn negative in the coming year. Meanwhile, as financial markets scramble to maximize every last ounce of what central bank impulse remains, we get such bubbles as London real estate, bitcoin and vintage cars, or as Citi puts it: “the wealth effect is stretching farther and farther afield.”
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Three months later, the latest to tackle the issue of central bank bubble creation, is BofA’s Barnaby Martin, who in a note released overnight asks rhetorically “are bubbles becoming more ‘bubbly’?

This post was published at Zero Hedge on Sep 5, 2017.