This Is How One Bank Will Trade The Bursting Of The Biggest Ever Asset Bubble In 2022

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by Tyler Durden
Saturday, Nov 06, 2021 - 01:44 PM

While central banks will never admit they have spawned a bubble - and not just any bubble but the biggest in history - and few will hike rates with the intention of mitigating asset price hyperinflation especially in a time of FAIT when inflation is expected to run hot creating an even bigger asset bubble, virtually everyone else including sellside commentators now admit what is obvious to everyone. Take BofA Chief Investment Strategist Michael Hartnett who in his latest Flow Shows writes that "inflows galore, earnings galore, liquidity galore... little wonder zeitgeist is “bubble.

To be fair, it's not just the Fed's fault (in conjunction with other global central banks) - yes they have injected tens of trillions, but their actions would be far more muted if it wasn't for the central bank-Treasury joint ventures that emerged in the aftermath of covid which enabled MMT/Helicopter Money, and which also triggered tens of trillions in fiscal stimulus. As Hartnett describes it:

... 7.1 billion vaccines, $32tn of policy stimulus, $840 million per hour central bank asset purchases, global stock market cap up $60 trillion in 18 months, GDP >10%, CPI>5%, house prices >20%, and lowest interest rates in 5000 years…you do the math; can't blame investors for "irrational exuberance" when central bank policy makers paralyzed by framework that regards Wall Street as "too big to fail."