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The Bipolar Stock Market (In 3 Simple Charts)

Just as the BIS has grown concerned at "the markets' buoyancy hinges on central banks' every word and deed.," the following two charts show, perhaps more worryingly and more clearly that any others just how bipolar (and short-fuse schizophrenic) the world's equity markets have become...

 

Sentiment has been totally crazy.. swinging from utterly dysphoric to complacently euphoric and back to 'brink of suicide'-like extremes on the words of a few PhDs around the world...

 

But one thing is clear - actions speak louder than words... Spot The Not-Currently-Printing-Money nation's stock market...

 

It appears the battle between 'fundamentals' and 'money-printing' is starting to be lost...

 

But, don;t tell anyone... Because when even the BIS tells you to keep your mouth shut, as it just did very publicly...

...a more sobering interpretation is also possible. To my mind, these events underline the fragility - dare I say growing fragility? - hidden beneath the markets' buoyancy.
 
Small pieces of news can generate outsize effects. This, in turn, can amplify mood swings. And it would be imprudent to ignore that markets did not fully stabilise by themselves. Once again, on the heels of the turbulence, major central banks made soothing statements, suggesting that they might delay normalisation in light of evolving macroeconomic conditions.
 
Recent events, if anything, have highlighted once more the degree to which markets are relying on central banks: the markets' buoyancy hinges on central banks' every word and deed.

... you keep your mouth shut.

 

Charts: Bloomberg