Well, it is not such a difficult question to answer, the central banks. Also in a economic situation like now when the yields in the bond market are in negative territory and mixed with some geopolitical turmoil that drives the equity markets higher and higher. Investors are seeking for lucrative asset’s and they could be found in the equity markets, they are buying more risky – assets with higher yields..
Asset purchases by central banks have risen to their highest levels since 2013, suggesting that the rallies in equity and credit markets—which some say already appear stretched—could continue picking up steam. Investors have pulled the equivalent of $133 billion from global equity funds so far this year, according to a weekly fund flows report from Bank of America. Of that nearly $80 billion has been pulled from U.S. equity funds. The data suggest the equity rally could continue regardless of the underlying economic fundamentals if central banks keep gobbling up stocks. While we remain deeply skeptical of the durability of such a rally… we suspect those with bearish longer-term inclinations may nevertheless feel now is not the time to position for them. Japanese Prime Minister Shinzo Abe has ordered more fiscal stimulus. Traders are pricing in less than 35% odds of the Federal Reserve raising rates this year. The mark on the U.K. is more enduring, with sterling about 11 percent weaker versus the dollar since the vote.
An index of European commodity companies headed for the highest level since August as a rally in copper helped Glencore Plc and BHP Billiton Plc rise at least 1.9% each. The Stoxx Europe 600 Index added 0.3 percent, rising for a fifth day in the longest winning streak since the Brexit vote. The gauge is within 10 points of erasing its losses after the June 23 referendum. There’s something of a mass psychosis going on related to the so-called starvation for yield. It is very sad when you are right and you are not making any money . .
J. Mason ♦