The Great Global Melt Up Has Begun
Yesterday, I explained how the Fed is not the only central bank that’s panicking.
If you’ve missed that article, the rough outline is as follows:
#1: The Fed is actively easing monetary conditions via four policies:
- Cutting rates (the Fed has cut rates twice this year already with a third cut expected today).
- A $60 billion per month quantitative easing (QE) program through which the Fed prints $60 billion in new money and uses it to buy Treasuries from the large banks.
- An overnight repo program through which the Fed is providing $120 billion in liquidity – up from $75 billion when this program was originally launched in September.
- A second repo program, called a “term repo.” Meaning the Fed is lending out the capital for a set period of time. This program is now at $45 billion – up from $30 billion when the Fed first launched this program in September.
#2: The European Central Bank (ECB) is easing monetary conditions via two policies:
- Cutting rates even deeper into negative territory for the FOURTH time.
- Launching a new continuous QE program next month through which it will print €20 billion every single month.
#3: The Bank of Japan (BoJ) is talking about easing monetary conditions via three policies:
- Cutting rates even deeper into negative territory for the second time.
- Expanding its ongoing QE program.
- Expanding its “yield targeting” program through which it intervenes to maintain certain yields for various Japanese Government Bonds.
#4: The Swiss National Bank (SNB):
- Printing money to buy stocks outright almost weekly. It’s already printed over $140 billion in new money with which it has bought stock in over 6,000 companies.
Mind you, these are just the BIG FOUR central banks.
China has begun cutting rates for banks and pumping liquidity directly into its financial system.
The Bank of Australia has just cut interest rates to a record low.
The Bank of India has already cut rates FIVE times this year and plans to make additional cuts if warranted.
According to the Financial Times, 60% of global central banks are now actively easing monetary policy. So when we talk about liquidity hitting the financial system, we’re not talking about a trickle or a river… we’re talking about a TSUNAMI.
Potentially the Last Bull Market of Our Lifetimes…
As a result of this, stock markets around the world – whether we’re talking about the U.S.’s S&P 500, Brazil’s Bovespa, Germany’s DAX, or Japan’s Nikkei – are exploding higher, shown below.
Here’s the breakdown:
- U.S.’s S&P: Orange line
- Brazil’s Bovespa: Light blue line
- Germany’s DAX: Red line
- Japan’s Nikkei: Dark blue line
This is just the beginning. The Great Global Melt Up has begun. This may indeed be the last bull market of our lifetimes – so let’s make the most of it!
I’ll detail a unique way to play this for U.S. investors in tomorrow’s edition of Money & Crisis.
In the meantime, I was on Cheddar last week discussing the Fed’s actions in great detail. You can watch the full video here.
Editor, Money & Crisis