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Albert Edwards: ‘Ludicrous’ To Assume Central Bank Liquidity Is ‘Compelled’ To Boost Stocks

"Liquidity will flow into whatever momentum trade emerges as the winner."

"Liquidity will flow into whatever momentum trade emerges as the winner."
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6 comments on “Albert Edwards: ‘Ludicrous’ To Assume Central Bank Liquidity Is ‘Compelled’ To Boost Stocks

  1. What is so very frightening about what is happening now is that this goes way, way beyond “writing off the second and third quarter”, IMHO. Even Angela Merkel is characterizing the reopening of the German economy as “treading on thin ice”. If businesses are not able to operate sufficiently to employ, buy inventory, pay rent and debt service- even for just 6 months- there will be a colossal fall of dominoes throughout the economy that will take years to repair.

    Either I am wrong ( and we will be good to go by October 1); or many people are oblivious to what is happening; or people know what is happening but they choose to ignore it.

    I also do not think the United States, and also the rest of the world, comes out of this crisis looking anything like we did going into the Covid-19 crisis. In the US, some things hopefully will be better ( healthcare and education available to all delivered in an efficient/on line manner, higher savings rate, appropriate immigration, and more domestic quality jobs related to manufacturing), but some will be worse (lingering unemployment, bankruptcies, diminished status of the USD as the world’s reserve currency, breakdown in global alliances- which hopefully do not lead to global economic wars).

  2. There is a very high chance that this all ends with UBI in the US and possibly scores of other countries.

    • Hopium- I agree. I forgot to list that. Several European countries effectively have that. For example- in France you can collect a paycheck for doing little to nothing, which is effectively UBI.

    • I honestly have a hard time seeing any other scenario that is does not result in a wave of bankruptcy so large the FED will need to print money to bail out lenders anyway but then of course you have millions of people forever dealing with debt collectors which hits the economy. UBI is the least costly option at this point.

      As far as where all this current FED money ends up. I would certainly not be surprised to find it going unintended places like Gold, Bitcoin and USD rather than stocks.

  3. I believe people here would like UBI to become more mainstream (and indeed Bush Jr and now Trump have both delivered helicopter money)… maybe like SocialSecurityInsurance came out of the Great Depression.
    Unfortunately I can’t see why either party (and certainly not working together) would be incentivized to dramatically change the economic model (hence Obamacare = Insurance Establishment + Medical Establishment).
    Also, just to call it out, if there was UBI wouldn’t that just feed our already over-large swathe of Rentiers? (not only literal landlords but telco monopolies, oil monopolies, etc)
    I’m biased but I like Edwards’ take: real commodities have values based on real demand (irrespective of financial sheninigans)… now the big question are whether equities are still close enough proxies to “real commodities”, at least there are physical horses in horse racing.

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