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Going Out With A Bang!

Published 24/12/2019, 11:09

Although the year was dominated – at least according to the headlines – by the US-China trade war, stocks are up a massive 30%. And that’s not because of stellar earnings growth pushing stock prices higher. On the contrary, global earnings are down. No, equities are up because of central banks, which, after a short pause, are easing once again.

The G4 central bank balance sheet as a share of GDP is rising again, pushing ever more liquidity into the financial system. And while it is debatable if this is helping central banks realize their goal of price stability, it is certainly helping equity markets reach new highs. And, based on the way things stand now, this pattern is likely to continue into 2020. Happy holidays!

G4 Central Bank Balance Sheet

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