Bill Gross: “The expansion of central bank balance sheets from perhaps $2 trillion in 2003 to a now gargantuan $12 trillion at the end of 2016 is remarkable. Not only did central banks buy $10 trillion of bonds, but they lowered policy rates to near 0% and in some cases, negative yields.
Withdrawal of stimulus, as has happened with the Fed in the past few years, seemingly must be replaced by an increased flow of asset purchases (bonds and stocks) from other central banks, as shown in Chart below. A client asked me recently when the Fed or other central banks would ever be able to sell their assets back into the market. My answer was “NEVER”. A $12 trillion global central bank balance sheet is PERMANENT – and growing at over $1 trillion a year, thanks to the ECB and the BOJ.
An investor must know that it is this money that now keeps the system functioning. Without it, even 0% policy rates are like methadone – cancelling the craving but not overcoming the addiction. The relevant point of all this for today’s financial markets? A 2.45%, 10-year U.S.Treasury rests at 2.45% because the ECB and BOJ are buying $150 billion a month of their own bonds and much of that money then flows from 10 basis points JGB’s and 45 basis point Bunds into 2.45% U.S. Treasuries. Read more »
The Federal Reserve has been on a bond-buying spree since the start of the financial crisis, trying to flood the economy with cheap money. The Fed is currently buying $85 billion worth of Treasury and Mortgage-backed securities each month to help stave off deflation and accelerate economic growth. While the Fed’s action is just one of many reasons the S&P 500 is up more than 14% year-to-date, it hasn’t had the intended effect on the U.S. economy. Here is why:
Companies, especially banks, have been hoarding cash since the financial crisis in 2008. Banks have been worried about a repeat, being caught with too few reserves and too much toxic debt. Thus, instead of flooding the economy with cheap cash, Quantitative Easing has only flooded balance sheets with cash. The vast majority of the money has not been lent out, essentially blocking the money from reaching the broader economy and accelerating economic growth, which was the primary goal of QE. The monetary base has swelled from $800 billion before the crisis to nearly $3.4 trillion now. However, consumer loans at commercial banks have gone from approximately $800 billion to $1.1 trillion during the same period. Because of this Read more »
By Mitch Zacks, Senior Portfolio Manager at Zacks Investment Management, Inc.
“The market is always looking out six to eight months. For this reason, investing using macro-economic data is not necessarily a winning strategy. Macro-economic data tends to be backward looking. The unemployment numbers tell you what has happened in the past; however, they don’t give a good read as to what might happen in the future. The S&P 500 does not care what the GDP numbers were last quarter. Instead, it is looking at what GDP growth is going to be in the coming quarter and, most importantly, whether that growth will come in stronger or weaker than current expectations. For this reason, I almost always prefer to follow an investment strategy that focuses on forward looking metrics, like changes in analysts’ earnings estimates, rather than trying to decipher what the latest CPI number is telling us about the market.
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Инвесторы нервозно воспринимают отсутствие сигналов со стороны ФРС и ЕЦБ о дальнейшем вливании денег в виде QE, LTRO или снадобья вроде Twist. Картина рынка напоминает вечеринку, где кончается алкоголь, а до этого - было в избытке. В таком случае похмелье не заставит себя ждать. Парадокс сегодняшних финансовых рынков в том, что для их роста участники ищут искусственные иллюзорные идеи (которые, однако, работают!), слабо имеющие отношение к реальной экономике. В то же время, реальные располагаемые доходы на душу населения в США последовательно падают. А ведь они являются основой конечного спроса, составляющего более 70% экономики страны.
Вот так выглядит влияние политики Федеральной Резервной Системы на фондовый индекс S&P500.
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