Who says quantitative easing and the global central bank put isn't working. Well, lately it is pretty much everyone including former central bankers and investing legends [16](which coincides with what we said in 2009 but it took the mainstream about 5 years to figure it out) except central planners, of course, and those who still manage money for a living. However global QE certainly is working for one group of people: those who in the aftermath of Piketty's release of Kapital 2.0 have fallen under the microscope: the world's wealthiest.
What is amusing is that many are still confused how it is that as the middle class is collapsing around the world, and certainly in the US, the wealthiest continue to collect more wealth. Hopefully the recently released 2014 edition of CapGemini's World Wealth Report [17]will shed some light on just where this wealth is not only coming from, but where it is going.
Here is the punchline: according to the latest wealth report the number of high net worth individuals increased by nearly 1.8 million in the past year, the second biggest surge since 2000, which also happened to be the crazy days of the first tech bubble (not to be confused with the current tech bubble). In other words, the epic, unprecedented stock bubble reflated by the world's coordinated central banks, has succeeded. Succeeded, that is, if its goal was to make the world's richest people wealthy beyond their wildest dreams. As for everyone else, just over 7 billion people [18], better luck next time.
What is perhaps just as amusing in considering the unintended (or perfectly intended) consequences of the Fed's attempts to "stimulate the economy" is that being a mere millionaire is no longer enough. Which is why CapGemini makes the following distinction: "For the purpose of our analysis, we separate HNWIs into three discrete wealth bands: those with US$1 million to US$5 million in investable wealth (millionaires next door); those with US$5 million to US$30 million (mid-tier millionaires) and those with US$30 million or more (ultra-HNWIs)."
Finally, for all those confused where the inflation, which is so "woefully" missing from the global economy, is look no further than the stock market. Because in 2014 the wealth of the world's millionaires, the vast majority of it contained in paper profits of financial assets, grew by a whopping 14% and hit a second consecutive record high of $52.3 trillion, increasing by over $6 trillion in one year!
Here are the full findings:
- HNWI ranks expanded by nearly 2 million individuals in 2013, marking a 15% growth rate and the second largest increase since 2000. North America and Asia-Pacific continued to lead the way, with Japan’s HNWI population witnessing significant growth. ??
- HNWI wealth grew by almost 14% to reach a second-consecutive record high of US$52.62 trillion in 2013, building on a strong five-year trend. Over the past five years, HNWI wealth globally increased by nearly US$20 trillion, US$2 trillion more than the total HNWI wealth currently in Asia-Pacific, the Middle East, and Africa combined.
- ??Ultra-HNWI population and wealth growth in 2013 outperformed other wealth bands in all regions except Latin America. The slow growth in Latin America, which holds the largest percentage of ultra-HNWI wealth (32.9%), constrained the global figure in 2013 and also over the last five years. ??
- Three clear HNWI performance clusters have emerged among the top 25 markets since the crisis in 2008, with the above-average growth country cluster representing a diverse mix of markets. Oil-rich Norway and Kuwait, the financial centers of Hong Kong and Singapore, and the emerging economic powerhouses of China, India, Russia, and Taiwan comprise the above-average growth cluster. Latin America and the Eurozone, meanwhile, have lagged.
- ??HNWI wealth is expected to reach another record of US$64.3 trillion by 2016, representing 22% growth over 2013 and almost US$12 trillion in new HNWI wealth. Growth is expected to be driven by robust expansion in most regions, though Asia-Pacific will lead the way with 9.8% CAGR. As forecasted in the 2013 World Wealth Report, Asia-Pacific is still expected to have the largest HNWI population by 2014 and the most wealth by 2015.
Finally, the next time someone says that Abenomics is an abysmal failure (such as Zero Hedge), feel free to counter with the following clear example of just how wrong they are and how successful Japan's berserk attempt to reflate everything at all costs (or at least the Nikkei) at a pace that makes even the Fed blush, has been:
Japan’s HNWI population growth rate surged to a record 22.3%, following a more modest annualized growth of 4.6% from 2007 to 2012. Propelled by Abenomics, Japan experienced significant returns in the equity and real estate markets on the strength of positive sentiment and better economic performance, especially during the first half of 2013.
Great news for Japan's 10%. As for everyone else there is "Abenomics' Legacy: Japan's Greatest "Misery" In 33 Years [19]."
That's ok though. In the New Abnormal, nobody cares about those who are below merely a "millionaire next door."
Finally, some charts to show just how "effective" QE has been visually.
First, the number of high net worth individuals broken down by region.
[20]
Next, what is the amount of wealth controlled by the world's uber-rich.
[21]
Everyone's favorite wealth pyramid: we find that 128,300 Ultra High Net Worth people control more than a third of all the wealth in the highest wealth pocket. The balance of the millionaires, some 13.6 million, hold the remaining 65%.
[22]
Broken down by country:
[23]
How does the wealth of the richest compare to the change in HNW population numbers.
[24]
Finally, if you think $52 trillion is a lot, wait until 2016 when CapGemini forecasts that the world's richest will control over $64 trillion, and rising at a 7% annual rate - roughly in line with the historical return of the S&P 500.
[25]
And now, we can't wait for the Piketty sequel, one which finally puts the global record wealth disparity in its correct context, one which "thanks" the world's central banks for making the richest people wealthier than they have ever been, while in the process crushing the world's middle class.
QE: "Mission Accomplished" indeed.
