- the Russian CB jacked its one-week repo-rate (9 percent to 10.5 percent), its key rate (from 8 percent to 9.5 percent), and its deposit rate (from 7 percent to 8.5 percent).
- the BOJ decided to triple purchases of stocks and property funds (ETFs and REITs), extend bond maturities from 4-7 years to 7-10 years, and raised the bond purchases ceiling from Y30 Trillion to Y80 Trillion,
- the PBOC said cut its main rate for the first time since 2012.
To make matters worse, BOAML said it would drop its 2015 SP500 EPS forecast by a buck on the heels of lower oil but lets be real, who cares about earnings when relative valuation it makes it so much easier to collect your 75-200 bps for managing grandma's retirement.
Vincent Reinhart and Ellen Zentner aren't to optimistic of the FED and foresee disconnects in rates:
"Simply put, if the Fed does not sell assets to shed reserves permanently or drain them temporarily in large volume, then account balances will be flooded and the private market in reserves will be rendered irrelevant. The effective funds rate will be disconnected from other overnight rates."
The US Fed was recently highlighting the long-term damage to economies that can come from sharp declines in economic activity.
Why do we get bubbles? Mostly because of the after-effects of low rates, easy credit standards, and non-judicious management of capital deployment. Businesses are not stupid, they can see right-through this bullshit of "sending signals" and whatnot.
Consider Japanese businesses, to-wit from Benzinga:
"This means that even as the Japanese Central bank tries to stimulate the economy, local businesses have realized the pent up demand as not being organic. This renders the fiscal stimulus and monetary easing measures useless for stimulating the underlying Japanese economy."I'm not sure how much longer this game will continue but now that we have sovereign central banks outright buying equities and managing economies, we're in for an epic crash when this goes tits up and no "last-resort" exists because it spent the past decade printing cash and buying toxic assets and trying to stimulate growth through cheap money and on and on.