The mid-1970s have been a useful template for what is possible (and even probable) in a centrally-planned world. As a reminder, the underlying backdrop was also similar (major economic downturn following the housing crashes in 1974-75 and again in 2006-2007 followed by aggressive Fed policy which was ultimately too loose for too long). It is quite clear, Citi notes, that the rally in the Dow has lasted longer than the “road map” would have suggested - at least in part driven by the ongoing expansion of the Fed’s Balance sheet - but with Taper talk increasing we wonder how long before the 70s are back in vogue.
[2]
Chart: Citi FX Technicals