Thursday, September 29, 2016

Bridgewater Calculates How Much Time 
Central Banks Have Left
Article highlights the thinking & math behind Ray Dalio*'s Bridgewater Associates on how central banks are running out of road & how long it will take to reach the end of that road .. "Assuming no changes to existing programs, the ECB and the BOJ, the two central banks most actively monetizing debt currently, have 8 and 26 months respectively, if they do no changes to their programs. However, if incremental easing is layered on, like expanding the scope of their bond buying programs or purchasing equities even more aggressively, the total rises substantially. The final answer: 68 months, or just above 5 and a half years, in the case of the ECB, were it to steamroll all political opposition and monetize virtually every possible bond (and 20% of the equity market), and 48 months, or 4 years, in the case of the BOJ. Which means for those market participants who have already torn most of their hair out from participating in a centrally planned "market" where nothing makes sense, get ready because, the insanity may last another 4 or 5 years longer."
LINK HERE to the article

No comments: