In this week's Off the Cuff podcast, Chris and Brian Pretti discuss:
- Financial Repression
- Central banks have 'cornered the market' for global capital
- Reason Behind The Dollar's Rise
- The smart money is getting out of riskier assets
- Global Flows of Capital
- The Fed hands the money-printing baton to the EU & China
- Intergenerational Friction
- Likely one of the defining issues of the future
Chris and Brian look at the recent episode of increased market volatility and see pressures building across the financial landscape. The world around, central planners are engaged in coordinated management of asset prices. But like caged wild animals, market forces struggle for freedom. And the jump in volatility we're beginning to see suggests that the world's central banks are not omnipotent; and that their regime of financial repression is likely to come to an end, and a poor one at that.
The big development over the past few months has been the strong rise in the US dollar. This has crushed the PM complex (little surprise there) along with many other commodities, while having little immediate effect on stocks (a much bigger surprise, as US-based multinational corporations will soon report FX losses on their overseas income).
Many conclude the rise in the dollar is due to the current and announced easing programs of foreign central banks, which arrive just as the US' own QE program concludes this month.
by jaypaul