Albert Edwards at Societe General has once again highlighted the risks in the markets, and that the coming bust will surely be devastating. At the end of 2021 he wrote about four surprises which will shake the markets.
US financial conditions have tightened considerably in recent weeks and severe cracks are beginning to be seen in the asset valuation ‘Ponzi scheme’ that the Fed et al have inflated over this last, and several previous, cycles. Like any other Ponzi scheme, it needs constant feeding with new money to keep the charade afloat. But having let the inflation genie out of the bottle, the Fed is now determined not to ease policy (yet) despite financial conditions tightening. Hence bond yields, unusually, are now rising in line with tightening financial conditions. But for how long?
At a decline of around 40% (close to 3,000 on the S&P), the soothing ‘brrrr’ of the QE printing presses will likely once again be heard. And that point might be closer than people think.
Go to the Walk The World Universe at https://walktheworld.com.au/
