Stunning Chart Shows That Central Bank Liquidity Is Now Driving All Asset Prices

Tyler Durden's picture

If there is a reason why traders walk into their office every day in a state of zombified daze, no longer able to trade various asset classes based on fundamental data or incremental news flow, there is a simple reason for that: global central bank liquidity injections have never been greater, and as of this moment, have surpassed all previous post-financial crisis central bank intervention.

As Deutsche Bank's Jim Reid points out, "it’s difficult at the moment to fight the central bank in the credit market, especially in Europe and the UK where they are a non price sensitive buyer of the asset class. Even outside of these asset purchase programs it’s fair to say that global policy continues to be remarkably loose. Of the main central banks the Fed has been largely neutralised even if they manage to add a fresh hike in September or December, and the ECB and BoJ have increased and expanded the scope of their QE programs with the BoE recommencing theirs after a nearly four-year break."

Collectively this means central bank liquidity is actually close to being as high as it’s been at any point post GFC even with the Fed’s QE program having been halted two years ago.

Reid concludes that after fears 12-18 months ago that we were starting to see an upcoming Fed tightening cycle and with concerns that we may actually see global central bank liquidity contract (there were even some fears of QT – quantitative tightening), the opposite has actually occurred.

As for Reid's declaration to "not fight central banks", he is of course right: while asset prices had disconnected with fundamentals many years ago, considering this unprecedented central bank step up in asset micromanagement, the only driver behind asset prices is the relentless wall of liquidity entering the global market at a record pace.

Incidentally the chart above also shows why there continues to be widespread, persistent skepticism about a so-called global recovery: after all, the record intervention by central banks meant to prop up asset prices (and, supposedly, economic growth) suggests that if anything, the global economy has never been weaker. 

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SomethingSomethingDarkSide's picture

"they are a non price sensitive buyer of the asset class"

Central Banks give absolutely 0 fucks, and it isn't stopping anytime soon - so would a gambler in Vegas with other people's money!

Hopeless for Change's picture

"Has been driving asset prices for years"

Fixed it for ya

Gaius Frakkin' Baltar's picture

Central banking is the dumb money this time, chasing itself...

This should end well...

spanish inquisition's picture

Not down is price sensitive. The total seems low.

tarsubil's picture

This is the Keynesian dream. Free capital for the elites and 0% on savings for the peasantry.

LawsofPhysics's picture

Well, I am shocked, just shocked I tell you...

The outcome of such "let the majority eat cake" monetary experiments is well known...

Get long sharecropping and guillotines....

venturen's picture

better keep the merry-go-round going....because the when it stops....it is going to be the worst implosion in over 100 years

Spungo's picture

Thimply Thtunning!

It seems more interesting when you say it with a lisp.

buzzsaw99's picture

corporate bond issuance through the roof, central bank support through the roof, and yet some people spew nothing but doom for stocks. i fart in their general direction.

Dr. Darkpool's picture

And the band plays on.

Allen_H's picture

rap on rap on rap on.......brother.

That is a prophetic song indeed.

AE911Truth's picture

Since 1971 private corporations acting as US Defense contractors including Lockheed Skunkworks and Parsons Corporation built taxpayer funded Tesla radiant energy devices which enabled them to jump to future years such as 2045 and bring back physical media containing a chronology of major events which they used for their private benefit trading in financial markets, and in other ways.

https://www.army.mil/article/164802/BREAKING__Army_scientists_successfully__teleport__Soldies

 

https://www.youtube.com/watch?v=GPV8lPvDsFA

NotApplicable's picture

Bunk! Even if they know how to jump forward, there is no such thing as coming back, regardless of what some mathematician might claim.

Time travel can be accelerated or decelerated, but not reversed. Reality is real for a reason.

ElectroGravitic's picture

It is clear from your response that you are not familiar with ProjectPegasus.net

http://www.projectpegasus.net/

http://Andy2016.net

 

withglee's picture

Time travel can be accelerated or decelerated, but not reversed. Reality is real for a reason.

Oh really? I agree about the irreversibilty part ... but the acceleration part escapes me. If there is anything that is a perfectly static measure, it is time. A HUL (and the size hole in the ground it has produced over all history) is not even as stable as time. And don't bring up Einstein unless you're prepared to explain his theory of relativity and his equation E=mc^2 (the later being very easy to demonstrate).

SMC's picture

April Fools!  LOL!  Good click bait.

Seasmoke's picture

Don't Fight The Fed. ......... Kill The Fed.

withglee's picture

Iterative secession. Then institute your own proper MOE process.

snakehead's picture

They're not "asset prices"

They're bets on what the Fed will do. Nothing else.

45North1's picture

 

My pension fund reported a 14% return last year.

Thankyou  CB's for keeping the fund solvent..... even though the buying power will decrease accordingly in the years to come.

This is how the seed corn gets eaten.

NotApplicable's picture

Remember, there's no such thing as control, but only massive amounts of influence. Thanks to the Law of Unintended Consequences, their only option when faced with impending disaster is to go double or nothing.

One day, nothing will emerge victorious.

withglee's picture

Remember, there's no such thing as control, but only massive amounts of influence.

Why? We have obvious evidence to the contrary. Examine your lawnmower engine if you dispute that.

Build one without a governor ... or a government manipulated throttle ... maybe you have a point. We won't let government control our lawn mowers. Why should we let them control our economy.

SMC's picture

Hyperinflation by propaganda pushers.

"Just Us" and their minions carpetbagging, buying up assets with "fresh, free" money, taking advantage of herd stupidity and ignorance.   

Hitlary and the DNC for Prison 2016.
https://wikileaks.org/dnc-emails/ 

withglee's picture

buying up assets with "fresh, free" money

In a proper MOE process, "all" money creation by responsible traders is "free". Thus the concept of "fresh" is meaningless. It only has meaning in the capitalists' "gamed" MOE process where they cyclically constrain and relax money creation by traders. How? They somehow sold the claim that "they" are the creators of money and have traders coming to them hat in hand.

Great scam.

Bryan's picture

With all the bank intervention, how can anyone hope to have any reasonable picture of the economy to base their risk decisions on?? 

withglee's picture

By being a banker. And then profiting by front running. Do you think they're able to build the largest building in every town in the world on a 4% spread?

stewie's picture

What is this "risk" you speak of?  Risk is gone my friend.

Ban KKiller's picture

Totally transparent. What's the problem, serfs? "Not price sensitive"....says it all. Close your eyes and BUY! Seems safe....ha-ha. 

Sandmann's picture

Socialism in a bottle.......

withglee's picture

If there is a reason why traders walk into their office every day in a state of zombified daze, no longer able to trade various asset classes based on fundamental data or incremental news flow, there is a simple reason for that: global central bank liquidity injections have never been greater, and as of this moment, have surpassed all previous post-financial crisis central bank intervention.

Never heard of the capitalists' farming operation? They call it the "business cycle".

And read closely: "liquidity injections". There is no such thing in a proper MOE process.

And in the "gamed" MOE process the capitalists are running, liquidity isn't "injected"; artificial restrictions to free money creation by traders making simple barter exchanges over time and space, is "relaxed".

In a "proper" MOE process, there are "no" restrictions on money creation by responsible traders  (those who don't default) ... ever ... anywhere.

csmith's picture

"Now" driving asset prices? When didn't it???

conraddobler's picture

It's almost as if  central banking is a scam to own and control all assets of planet earth..........

 

NAH!

. . . _ _ _ . . .'s picture

"even with the Fed’s QE program having been halted two years ago."

Their program was not halted, it has continued through proxy (Belgium et al.)

.

Global hyper-inflation will be the impetus for digital cash, which will be presented as a defense against wild cash-induced market swings (perpetrated by central banks) in the same way that Keynesianism was introduced as a 'cure' to the great depression. Labour unions also had the effect of raising wages which even recession could no longer counter.

Let's not forget how Stalin and Hitler dealt with their own economic problems.

History rhymes.

scubapro's picture

 

 

as long as there is an asset to buy, in theory CBs cn continue to place a bid under all prices.  given they create money for said bid, what is there to stop them from this?   to them it appears to 'work' without any negative consequences so far.  that they care about at least.  

so while we know CBs are not omnipotent (see 2008 rate cuts while mkts crash), their actual market participation is very impactful.

 

what might derail this?  theyrun out of asset to buy, like jgb's whose price is completely fake (not unlike buying your own house from yourself and claiming its worth the price).   given that private investors far outweigh CB holdings, IF the investors got spooked and sold it could put CBs on their heels, then margin calls and it gets away from them again.      what else?    maybe rapid inflation...but that would need people to spend what little money they have OR goods go scarce causing prices to rise.     then they would have to raise rates.   

assume the CBs will do exactly what they have done inthe past until it unravels significantly.  and given the US isnt participating, the bazooka is still available.   figure THAT one will come out when stocks hit -19%.  

they will behave exactly the same until they cant.

AE911Truth's picture

If these sleezebags have been able to keep the system from crashing for far longer than you thought was possible, it may be because they have some tools you do not know about; namely: Chrononauts.

 

In 1971, as a 10 year old DARPA Chrononaut, Andrew D. Basiago  says he was sent to 2045 to pick up (pre-arranged) a microfilm containing major (tradable) events over the last (next) 74 years, brought it back to 1971 and handed it over to his superiors as instructed.

UndertheDRADIS's picture

If one defines wealth as "what happens when human expertise is applied to raw materials", none of this money has gone into generating wealth. Torches are easy to fabricate. Where the hell do I get a pitchfork?

spqrusa's picture

The interest rate apartheid will continue as the sheeple can't imagine a world otherwise...