BOJ central banks ECB fed

No More Heroin: Your Visual Guide To The Global Central Bank Exit Plan

A couple of weeks ago, Citi's Matt King discussed what is perhaps the best reason of all to be cautious about dipping your toe into equity markets that are trading at elevated (and that's putting it very, very nicely) multiples and/or into credit markets where spreads have compressed massively from wides seen 12 months ago. For those who missed it, here is King's simple question for those inclined to go (or "stay") long: Do you really want to be buying credit at post-crisis tights, or the S&P at a cyclically-adjusted P/E which has been exceeded only in 1998-2000 and 1929? That's obviously a rhetorical question. The answer is "no," you do not. But that hasn't stopped folks from piling in and as I've been pretty keen on reminding the retail crowd: the central bank liquidity flow backstop is on its way out the door, albeit slowly. Here's what I said last week on this: If you've looked into the situation enough to understand the concept of central bank QE "flow" providing a near constant bid for risk, then you've almost surely come across an article (or six) explaining that the monetary powers that be are currently plotting their exit. Armed with that knowledge, you'd be unlikel
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