One of the prevailing stories which nervous market participants whisper to each other at bedtime involves the timely appearance of the Fairy God-mother, hastening to Earth from Tir Nan Og to launch another multi-trillion round of money-printing the instant that our over-inflated asset prices suffer any meaningful setback. This comforting narrative, however, presupposes three key elements…
…firstly, that the macro-economic background will allow Her the leeway to wave Her wand sufficiently early to stop the rot; secondly, that the Evil Fairy doesn’t get there first and proceed to deliver a much-needed fright before finally ending the naughty children’s nightmares; and finally that, Good or Evil, the Fairy’s magic proves powerful enough to ward off a rather darker enchantment which both Fairy and frightened children might manage to cast upon each other when they meet.
For an in-depth discussion of the interplay of growth, inflation, equities, and the bond market – plus a look at the parallels with 1987, please click the link to launch the PDF: