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Thursday, July 7, 2016

For Whom the Markets Yawn - Brexit?

Weekend Reading: Central Banks Save The World


You have to admit it is really quite amazing. Two weeks ago, Central Bankers and leading politicians were exclaiming that if Britain left the E.U. it would be a catastrophic economic event on the magnitude of a “Lehman” moment. However, despite all of the “hand-wringing,” if you had been asleep over the last month, as shown in the chart below, you wouldn’t know something had happened.


SP500-Monthly-YTD-070716


Of course, it was the “rapid response” team of the Federal Reserve, Bank of England and ECB that provided “bulls”the fuel to push asset prices back to recent levels as I discussed last weekend.
For now, Central Banks have seemingly accomplished the rescue of the entire global financial system by one again lofting asset prices higher. The problem, however, remains the underlying fundamental issues of weak earnings, slowing economic growth and a collapsing Chinese economy.
There is a point, unknown to anyone currently, where the failure of monetary policy will occur. The resulting impact will likely be one of the worst financial disasters in human and financial history. But that is a topic for later.

For now, here is your reading list for the weekend.

LEARNING LIBRARY