Blasé Market + Bravado Policy = Recipe 4 Disaster
While doing my Saturday morning reading, I came across something that got me thinking...
A couple BofA analysts said... "Markets stop panicking when policymakers start panicking, but no panic anywhere despite the highest 30-year yield since June 2007 and spiking commodities," "Blasé markets" and "bravado policy" are "a recipe for volatility,"
What does that mean exactly? It's essentially describing a highly dangerous economic situation where both investors & policymakers are dangerously overconfident, ignoring mounting risks until it is too late. Taken a step further, it means that the combination of investor complacency and political arrogance creates the perfect conditions for a severe financial crisis.
Could we potentially be in this situation today?
Well... Forced to choose where we are in the 'Stock Market Cycle' today, I'd go with 'complacency'. ✔
I guess that leaves us with the policy question, namely is there "political arrogance"? 🤔...
'Recipe for disaster' anyone!?!?!? Food for thought...
