The Global Economy Didn’t Change Last Year, Views Of QE Did
By Tyler Durden
Submitted by Jeffrey Snider via Alhambra Investment Partners,
The stock market is still viewed as if it were a discounting mechanism, a system where information is processed and priced to deliver insight about the fundamental state of liquidity, markets, and the economy. That view has always been debatable, but never more so than the whole of this century so far. What were share prices suggesting, fundamentally, in March 2000? Or October 2007? Market efficiency proponents can only suggest that the “information” flowing into stock prices changed, as if there weren’t any warnings in the years leading up to those peaks.
You can make the same argument against stocks on the way up. In the US, starting just after QE3 and just before QE4, US stocks went on a rampage in anticipation of a full recovery drawn closer by the determined efforts of Ben Bernanke. It wasn’t the case that the recovery was then at hand; far from it, since throughout 2012 there were more hints of recession than anything else. Instead, stocks were predicting that QE would work even though they ignored that it was third and fourth iterations that apparently suggested it. This is a universal question about not just stocks but monetarism and the financialism that has taken hold of what used to be free markets (where discounting was most likely).
On September 25, 2013, Japan’s Prime Minister Shinzo Abe delivered a speech to the floor of the NYSE. He began by citing the Hollywood movie Wall Street, inducing several cringe-worthy passages that were intended to show how Japan had just faded over time.
In the original film in 1987, the words “Nikkei Index” appear. Japanese businessmen also take the screen and the film reminds us of the era in which the Japanese economy was regarded as a juggernaut.
However, in the 2010 sequel, the investors that appear are Chinese and it is not Wall Street but London where Gordon [Gekko] amasses his wealth. Japan is conspicuous only in its absence.
The only real significance of Abe’s statement is the reference to a shift into London (eurodollars) but that is another story. Abe’s point was to emphasize the introduction of QQE (and the other two “arrows”) having been effected only months before. He was on his own version of a Wall Street road show to get the world’s “markets” to buy in to his vision.
It is certainly true that after the bursting of its bubble, from the 1990’s Japan was mired in almost 20 years of deflation and the economy was sluggish. But today, I have come to tell you that Japan will once again be a country where there is money to be made, and that just as Gordon Gekko made a comeback in the financial world after 23 years of absence, so too can we now say that “Japan is back.”
He told Wall Street traders that, “the Japanese economy that surrounds us in exceptionally good” and that they should “buy my Abenomics.” He gave them no real …read more
Source: The Global Economy Didn’t Change Last Year, Views Of QE Did
