Ambrose Evans-Pritchard is looking for higher prices. Not because the world's economies will recover, and not because the EU is pulling itself back together, but because the world's central banks are racing to drive down their currencies. For the same reasons, Paul Price argued in Covered Calls – The Hidden Risk for 2013 and Beyond, the chance that stocks will soar is great enough to keep him from making ample use of his call-writing strategy. ~ Ilene
Bears beware. A monetary revolution is underway.
Stocks to soar as world money catches fire, Calvinst Europe left behind
The US, Japan, Britain, as well as the Swiss, Scandies, and a string of states around the world, are actively driving down their currencies or imposing caps.
They are tearing up the script, embracing the new creed of nominal GDP targeting (NGDP), a licence for yet more radical action.
The side-effects of this currency warfare — or "beggar-thy-neighbour’ policy as it was known in the 1930s — is an escalating leakage of monetary stimulus into the global system.
So don’t fight the Fed, and never fight the world’s central banks on multiple fronts. (my emphasis)
Stock markets have already sensed this, up to a point, lifting Tokyo’s Nikkei by 23pc and Wall Street by 10pc since June.
The New Year ritual of predictions is a time for bravado, so let me hazzard that the S&P 500 index of stocks will break through its all time high of 1565 in early 2013 — mindful though I am of flagging volume and a wicked 12-year triple top…
Keep reading: Stocks to soar as world money catches fire, Calvinst Europe left behind – Telegraph.
