Winston Churchill used to say: “I no longer listen to what people say, I just watch what they do. Behavior never lies”. The narrative today-what they say- tells us the economies are strong and the soft landing is not only possible, it’s the scenario with the highest probability of occurrence. In the chart below, however, you can se what they’ve done (behavior): for the month of September that has just concluded, central banks around the world have executed 21 rate cuts, which have only been higher over the last 25 years during the great financial crisis and during Covid-19. The difference this time, is that we’re not in a crisis, at least not officially. But the monetary actions that have been executed in terms of size, speed and direction correspond to a behavior that will be associated with a crisis. And it looks like the trend is going to continue. Are central banks preparing us for something we’re not aware of? Why has the airbag popped if there hasn’t been a crash?
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