Following its long tradition of inviting market experts to shed their insight on upcoming events, the FT have published an analysis of the forthcoming meeting of Central Bankers at Jackson Hole.
Today we had a blend of history, cliché and folksy charm, all garnished with understatement of the blindingly obvious. To be fair to the author, Michael O’Sullivan, Chief Investment Officer of the International Wealth Management Division at Credit Suisse, I suspect that writing a piece like this for the FT is not an exciting chance to ‘tell the world what you really think’ – more an opportunity to get your firm’s name printed on a pink background. I doubt he gets an inspiring brief from his CEO or from 'Lockstep Lionel'...’don’t rock the boat Michael, just reinforce what the FT and the CBs want everyone to believe – you know, forward guidance and all that’
But we did learn a number of important facts such as ‘Paul Volcker is a keen fisherman’, and because of that…‘trout is the most important fish in central banking’. This was news to those of us who thought it was 'red herring' or 'damp squib'…which is actually a firework that disappoints when wet, rather than a ten legged cephalopod, but let’s not be picky.
Another revelation was this:
“The primary test will be the extent to which they — notably the Fed, ECB and Bank of England — offer a sense that collectively they are edging towards “the end of accommodation”, in that the decommissioning of central bank balance sheets may now be being planned”
It’s good to know that, having announced it in the US, Janet Yellen may indeed have considered the other children. I always knew she was caring and thorough.
But this was my favourite insight:
‘the perennial dosing of markets with quantitative easing and its accoutrements (that is, negative rates) is beginning to create risks and imbalances in the financial and political economic systems’
Beginning? As in:
- Donald Trump is beginning to look like a loud-mouthed braggadocio
- John McCain is beginning to froth at the mouth every time he hears the word ‘Russia’, and…
- CNN are beginning to show signs of being focused on 'ratings' rather than 'truth'
There’s a lot of this about. Yesterday I noticed that my dog is beginning to wag his tail every time he hears the word ‘biscuit’.
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P.S. The FT have also noticed that the ECB are beginning to run out of bonds to buy. Don’t worry though - there is a rumour that, in order to demonstrate his commitment to the survival of free market capitalism, Mario Draghi is prepared to buy everything in Europe, except his mum’s vegetable stall and Goldman Sachs. His authority has to end somewhere.