With the Dow plunging another 1,000 points and gold pulling back after a monster surge off the 2019 lows, one of the greats just said, “The central bank put is now worthless.”
Michael Oliver audio interview has now been released!
Central Bank Put Now Worthless
February 28 (King World News) – Peter Boockvar: While the discussions and debates had already started, it was yesterday’s WSJ editorial from Kevin Warsh on top of another puke in the market that has brought front and center what we all think the Fed and other central banks should do in light of the economic headwinds we all face.
Warsh by the way will be interviewed on CNBC at 7am pushing his point of view. I’d ask him this: While rational people can argue whether the Fed should cut or not, what do you possibly think the ECB and BoJ can do with monetary policy with rates already negative (which has damaged bank profitability) and QE already ongoing?
My viewpoint stated here again is that there is nothing that will be ‘stimulated’ monetarily from a rate cut or two that isn’t already being ‘stimulated’ by the very low rate environment. And rate cuts aren’t a vaccine and won’t bring factories back and people traveling again. If the purpose is to respond to the ‘tightening of financial conditions’, aka try to lift the S&P 500 and narrow credit spreads, I ask this question:
What would be worse, a Fed that tells us that they will do nothing right now and wait to see how this virus plays out or they ‘do something’, the markets rally for a few days or weeks and then goes right back down again in response to the underlying economic fundamentals like they did in response to the last two rate cutting cycles in 2000-2002 and 2007-2008?
Central Bank Put Now Worthless
I’d argue the latter would be worse. Now can a rate cut or two ‘stabilize’ the markets and calm everyone down? Maybe but I highly doubt it more than for a short period of time as I really believe this central bank put is now worthless. The economic fundamentals, whether good or bad have taken over and that is what is and will drive markets. Stopping the spread of this virus is the best economic stimulant we could have.
Bond Markets The Destination Of Scared Money
While most global bond markets continue to be the destination of scared money, keep an eye on the Italian bond market as yields are rising for the 6th straight day as people are worried about what the virus spread will do to the country’s stretched finances and excessive debt levels.
This was almost 100 in early January:
Fear & Greed Index Has Plunged From
Almost 100 in early January to 9!
One Of The Most Important Interviews Of 2020
***KWN has now released one of the most important audio interviews of 2020 with Michael Oliver discussing the stock market crash and why gold will surprise, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
Michael Oliver As Stocks Plunge Gold Will Surprise
ALSO RELEASED: Michael Oliver – As Stocks Plunge This Will Surprise The World CLICK HERE TO READ.
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