Asia Morning: Markets Keep Buying Everything, Even Tesla

Jan 14 04:01 2020 Print This Article

It is hard to believe that just one week ago, markets were again contemplating a potential war in the Middle East. That bullet was dodged, as both the US and Iran stepped back from the brink, albeit with a human tragedy that may still come to haunt Iran’s leadership. Markets instead have focused on their happy place, a trade-deal signing this week in Washington DC accelerating a global recovery. In turn, it is powered by a worldwide savings glut searching for a home as central banks hold rates globally at or near zero per cent.

What has been lost in the euphoria of the buy everything trade, are the worlds central banks. Ex the Federal Reserve, which got its punches in first, the rest of the pack appear to be easing at a frenetic pace, with interest rates in developing Asia at or near record lows or soon to be. Europ and Japan continue to quantitatively ease, with no end in sight. The Reserve Bank of Australia is thinking about it, and the Federal Reserve continues its guerilla operation via the short-term repo market.

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