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Rabobank: Central Banks Need To Get The Grannies To Dive Into Stocks

Courtesy of ZeroHedge View original post here.

Submitted by Michael Every of Rabobank

Subterranean Joe, Sick, Blues

“There’s no way I can lose.” That is the title of a Bloomberg article today looking “Inside China’s Stock-Market Frenzy”. It notes ‘Leo Li, a 28-yar old freelance screenwriter in southern city of Kunming, says he’s “pretty much all-in” on stocks but isn’t borrowing to maximize returns – yet. “With leverage, it only makes sense to add it when you can be 100% certain of gains,” said Li, adding that his family sold property last year to buy stocks, “That usually happens when the old grannies start rushing in during the mid-to late stage of a rally. We are not there yet, but when the time comes I will be ready.”’ It’s nice to see young investors with such a keen understanding of the fundamentals of this rally – which are not related to Chinese CPI and PPI at 2.5% y/y (as expected) and -3.0% y/y (slightly better than the consensus), which is a very bad combination for many firms.

Yet that’s good news: it means more need for central banks to get the grannies to dive in to stocks. As do two contrasting Anglo-Saxon fiscal developments.

In the UK, Chancellor Sunak has gone kitchen sink with a mini-budget including no stamp duty on house purchases up to GBP500,000; VAT cut from 20% to 5%; paying firms GBP1,000 per head to bring back a furloughed worker; paying employers to create jobs for 16-24 year olds; green grants for households; and government meal vouchers for 50% off a sit-down-meal (up to GBP10 per head) from Mondays to Wednesdays. 10-year gilts sit just off record lows of 0.15%.

In the US, Joe Biden is largely eschewing Sanders’ radical policy agenda. No Medicare for all, tuition-free public college, or the Green New Deal in his released policy proposals. There are green targets, prohibiting government contracts to firms that pay less than USD15 per hour, and a pledge public procurement will buy American (which is Trumpian). Yet what we do not see is a kitchen-sink fiscal approach: the message is “gradualism”. Likewise, there is still no Trump fiscal plan to speak of. 10-year Treasuries sit at 0.66%.

Meanwhile, global virus cases are now 12 million and rising – which gives me the blues. Allow me to respond in song, with apologies once again to Bob Dylan.

Trump’s on the pavement; Mixing up his virus medicine

Biden’s in the basement; Talking ‘bout the lack of government

CIA man in the trench coat; Badge out, laid off

Says he’s got a bad cough; there was a Russian pay off

Look out kid; It’s somethin’ they did

God knows when; But even China’s doing it again

Bears better duck down the alley way; Lookin’ for a new friend

The man with the yield cap; More swill for the pig pen

You want one dollar bills, they only got ten

Maggie/Ronnie fleet foot; No mo’ miners full of black soot

Then the Greenspan put; Planted all the bed-rot

The phone’s tapped anyway; So’s TikTok many say

Can’t bust no matter what you trade; Orders from the D.A.

Look out kid; It’s what they all did

Don’t need to walk on tip toes; Don’t worry about your trade flows

Better stay away from those; That talk about a fire hose

Don’t need to keep a clean nose; Or even wear the plain clothes

You don’t need a weather man; To know which way the S&P blows

Oh, get sick, get well; It’s still the central-bankers’ ink well

Hang bail, sure can tell; That everything is gonna sell

Try hard, get barred; Get back, write braille

Get jailed, jump bail; Paid by the government, if you fail

Look out kid; You’re gonna get hit;

But losers, cheaters; Six-time users; Hanging round the central-bankers;

Powell by the whirlpool; Lookin’ for a new fool

But have to follow leaders, watchin’ vol parameters

Oh, get woke, keep warm; Long pants romance

Day traders get blessed; Everyone’s a success

Please her, please him, free gifts; Legal steal, don’t lift

…Or twenty years of schoolin’; And they put you on the day shift

Look out kid; They don’t try to keep it all hid

It’s ‘trade’ or jump down a manhole; Light yourself a candle;

Drop-out and wear sandals; It’s such a bloody scandal

Sell-out or be a bum; They’re sharks; you’re chum

Monet’ry pumps don’t work

‘Cause central-vandals took the handles  


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