Markets have moved from fiction to pure fairy tale. As Bloomberg's Simon Kennedy notes, in the last week we have seen Ed Yardeni cite "The Wizard of Oz", International Monetary Fund Managing Director Christine Lagarde went with both “Alice in Wonderland” and Harry Potter, and Stephen King - the HSBC chief economist, not the author - trolled the fantasy aisle. All with a similar message - that despite the current weakness in global stocks - there is more room to fall...
Via Bloomberg, [5]
The reason is that just as global growth is weakening again, central bankers who sustained much of the expansion are running out of ammunition.
“Investors around the world are shocked, shocked that the monetary wizards may have run out of magic tricks to revive global economic growth,” said Yardeni, president and chief investment strategist at Yardeni Research Inc. in New York. “Even the wizards are admitting that their powers to do so are limited.”
To King, markets spent most of this year caught up in a fairy tale that policy makers were on top of things.
“Like most fairy tales it can’t be true in reality,” King told a conference in Washington last week. “There’s something wrong with it.”
And finally...
Spinning a real-world warning from the film “The Big Lebowski,” Alberto Gallo of Royal Bank of Scotland Group Plc tells investors “you’re entering a world of pain.”
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Curiouser and curiouser...
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