The Scale of Monetary Easing
Central banks around the world have been aggressively cutting interest rates in an effort to stimulate economic growth. In recent months, 21 central banks have lowered their policy rates. This level of monetary easing is comparable to the measures taken during the global financial crisis of 2008 and the COVID-19 pandemic.
The Disparity Between Markets and Fundamentals
Despite the widespread economic challenges, stock markets, real estate prices, and gold prices have continued to rise. This disconnect between market performance and underlying economic conditions is a sign of the extraordinary levels of liquidity being injected into the global economy.
The Risk of a Market Shock
The current situation is unsustainable. While the market may continue to rise in the short term, there is a risk of a significant correction in the future. As the economic challenges become more apparent, it is possible that markets could experience a sharp decline.
The global economy is facing significant challenges, and central banks are responding with aggressive monetary easing. While markets have remained resilient, there is a risk of a market correction in the future.
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