Earlier today we showed the three key headlines that summarized today's euphoric mood, and explain the general liftathon among massively oversold risk assets:
- Stocks Rebound on Stimulus Speculation
- Oil Rallies in Biggest 2-Day Surge Since August on Stimulus Bets
- Yen Investors Homeward Bound as BOJ Stimulus Seen Boosting Bonds
And now, here is DB's Jim Reid putting it all together, and explaining that whatever it was that sent global equity markets to all time highs despite global economic slowdown as recently as last summer, is once again back front and center:
From Deutsche Bank's Jim Reid:
Yesterday the folks on Bloomberg TV finally had something to get excited about with the ECB meeting even if many will end up being once bitten twice shy this time round.
Indeed the last time the market flirted with Mr Draghi's seductive sound bites it eventually got jilted at the easing aisle. However there was a hint of giving him a second chance yesterday with a fairly positive market reaction to pretty firm signaling that the ECB will ease again in March.
Although the meeting is 7 weeks away could yesterday mark the start of another plate spinning cycle from the central banks?
The market chatter is now looking towards Kuroda to signal more action when the BoJ meet this time next week. Will Yellen also signal a more cautious and dovish stance at the FOMC next Wednesday?
We continue to think central bank money printing globally remains in the early stages. Such policies could go on for several years yet even if there are periodic pauses.
Ultimately we continue to think monetary policy will finance fiscal spending but that will take a recession to focus policy makers’ minds.
For now with inflation so low it would be strange if central banks didn't do more in the face of such market turmoil, low inflation and elevated risk factors. It won't be a major growth stimulant but any extra liquidity provided will have to go somewhere so it's too early to say the central bank era of elevating asset prices is over even if it's becoming more difficult to get the same response.