Blain's Morning Porridge - March 18 2021, Low Rates? There will be consequences
Central Banks are playing the “lower for longer” interest rate card to reassure markets on growth. There are always consequences of such actions – ranging from bubbles, delusion and fraud.
Blain’s Morning Porridge – March 18 2021: Low rates? Don’t worry.. What could possibly go wrong…?
“My wallet is like an onion, opening it makes me cry…”
This morning – Central Banks are playing the “lower for longer” interest rate card to reassure markets on growth. There are always consequences of such actions – ranging from bubbles, delusion and fraud. Eventually consequences trigger change, and reassessment – which is driving the rotation from Hope as a Strategy Tech into Fundamental stocks – Autos are a good example.
Lots going on in Markets. The Fed Dove fluttered its wings y’day. The BoE speaks today.
What do they confirm: lower rates for longer whatever inflation spike they expect will “briefly” transit markets. The central banks are telling us “these are not the droids” we are looking for when it comes to the perceived inflation threat. Their policies aim to maintain the illusion create stability and confidence in the current lower for longer environment to facilitate recovery and stronger growth post pandemic. Yay!
In practice, the best laid plans of mice and men oft go awry.
There will be consequences. Central Banks will continue the great interest-rate repression. They are betting strong recovery,(the Fed now expects 6.5% growth), and jobs will stabilise the economy and create a base in the next few years. Keeping rates artificially low will enable it – they hope.
On the other hand… They are playing with fire.
Click here for the full story: https://morningporridge.com/blog/blains-morning-porridge/low-rates-dont-worry-what-could-possibly-go-wrong/