Policy-makers have gone mad and the general public doesn’t quite understand how dire the situation is. Everyone’s bullish on the U.S. economy; can you find anyone that isn’t saying that “things are looking good, overall,” or that doesn’t have his money tied to deflationary assets?
On Wednesday and on Thursday, we saw record up-days with the major indices. It’s not a surprise, given how oversold they were, on a short-term basis, but looking at 2019, we know that central banks want to keep tightening rates and shrinking their balance sheets.
I’ve shown you many times that while the Federal Reserve is the leader of the global Quantitative Tightening cycle, in 2019, both Europe and Japan will, most likely, will join the U.S. central bank in this endeavor.
As I showed you last week, 88.7% of the 70 asset classes tracked by Deutsche Bank have netted negative total returns this year. The last time it happened was right as cars and electricity were being introduced in our world and getting commercialized. It was close to 100 years ago.