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Central Banks Are Terrified... But of What?

A quick question for the “recovery” enthusiasts…

If the recovery is real and as strong as the “data” suggests… why are Central Banks engaged in the most aggressive stimulus in history?

Consider Europe.

According to the official data, the EU’s Services and Manufacturing PMI’s were 53.1 and 51.8 in August. Both were significantly above 50 (which represents contraction)…

Moreover, the EU’s inflation rate has risen over 0.4% in four months, rising from -0.2% in April to 0.2% today.

And yet, despite this data, the ECB continues to hold interest rates at -0.4% while also spending €80 billion per month in QE (the equivalent of $90 billion). At this pace, the ECB will spend nearly €1 TRILLION IN QE PER YEAR.

Put another way, the ECB is engaged in the most aggressive monetary policy in its history (even more aggressive than at the heart of the 2012 EU banking crisis) at a time when the EU economy, according to official data, is well above contraction.

Then there’s Japan.

According to the official data, the...


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