Loading ...Friday, May 7, 2021
But what about finance? Central bank policies now command market trading dynamics, while government-related debt dominates system Credit expansion. There is every reason to believe state-directed lending, after reaching new extremes during the pandemic, will become only more obtrusive going forward. A compelling case can be made this new age of government directed finance and spending is now driving a new inflationary cycle.
However, I certainly don’t want to dismiss end-of-cycle dynamics. “Blow-off” dynamics, after all, are proliferating. One can start with the trajectory of the Fed’s balance sheet, along with unbounded fiscal deficit spending. There are, as well, myriad indications of “Terminal Phase” speculative excess, including numerous manias, over-leverage, ETF flows, corporate bond issuance, the ARK funds, etc. The breadth and scope of such extreme behavior portend change is in the offing.
These days, markets and about everyone anticipates that historic monetary and fiscal stimulus will continue to fuel historic asset bull markets. The existing cycle is very much intact, it is believed, with New Age central banking continuing to underpin unrestrained fiscal spending. But could both monetary and fiscal authorities have pushed things too far? Could we be nearing a major adjustment, where the respective interests of an expansive government and the markets finally diverge? Could a bout of market discipline catch Washington, along with about everybody, by complete surprise? A crazy thought.
However, I certainly don’t want to dismiss end-of-cycle dynamics. “Blow-off” dynamics, after all, are proliferating. One can start with the trajectory of the Fed’s balance sheet, along with unbounded fiscal deficit spending. There are, as well, myriad indications of “Terminal Phase” speculative excess, including numerous manias, over-leverage, ETF flows, corporate bond issuance, the ARK funds, etc. The breadth and scope of such extreme behavior portend change is in the offing.
These days, markets and about everyone anticipates that historic monetary and fiscal stimulus will continue to fuel historic asset bull markets. The existing cycle is very much intact, it is believed, with New Age central banking continuing to underpin unrestrained fiscal spending. But could both monetary and fiscal authorities have pushed things too far? Could we be nearing a major adjustment, where the respective interests of an expansive government and the markets finally diverge? Could a bout of market discipline catch Washington, along with about everybody, by complete surprise? A crazy thought.
http://creditbubblebulletin.blogspot.com/2021/05/weekly-commentary-generational-turning.html