Central banks once bought assets such as bonds and futures as a temporary plunge protection team tactic to stop a downturn from accelerating into a rout or crash. Now they are buying trillions of dollars in bonds and stocks during so-called "good times" to keep the market lofting higher even as growth slows."Market Musings: What Does the Stock Market Tell Us about Economic 'Reality'?" By Charles Hugh Smith, Of Two Minds subscriber newsletter, June 2017.
This permanent intervention via buying stocks has distorted what the market can tell us. Rather than communicate a sense of how the real economy is doing, the market now reflects the will of central banks to keep the market lofting ever higher on the back of central bank purchases and liquidity.
30 June 2017
Stock market disconnect.
The stock market appears to reflect only the froth of our political and economic distortions.