Citi's Matt King once again hits it out of the ballpark.
After laying out the fundamental problems caused by central planning, namely a historic plunge in yields, and a collapse in global growth...
... a decline in consumer spending and a collapse in investment, offset by a surge in buybacks and new debt issuance.
Matt King presents the only response the central banks have: leave investors with nothing to buy.
Which he summarizes in 6 short words.
But how does buying a couple billion in sovereign bonds every month whether in the US, or Japan or Europe translate into record stock prices even as the global economy has not been this bad since the first Great Depression?After all, there are tens of trillions in securities across the globe (not counting the hundreds of trillions in derivatives).
Simple: when you manage a 693x leverage between a sovereign bond entry and a CCC bond exit, it is perhaps far more surprising that the S&P isn't artificial orders of magnitude higher.