A word from Davos: End of indexing

Posted: January 18, 2017 in Uncategorized

Thanks to Mohamed El -Erian (Allianz Chief Economic Advisor)(highlights by me)

 

<<From Davos, Switzerland, where all the almighty Central Bankers and Government are meeting a scary decision

Jon Hilsenrath (WSJ correspondent in Davos

in the Wall Street Journal: “An epoch of exceptional monetary stimulus is drawing to a close. Central banks have exhausted themselves in their efforts to spur economic growth with low—even negative—short-term interest rates and bond-purchase programs meant to drive financial-asset prices higher.”>>

Which mean that the Guardian Angel that oversaw the last 9 years of rally and made the SP500 grow  over 240%…just went AWOL.

In a study Deutsche Bank said that the Central bankers intervention was responsible for 40% of this rally (the paper was from last year…which mean that by their calculations SP500 minus Fed would be somewhere around 1,600…).

Reserve Bank intervention usually hits the top 20/top 50 company for each index (due to the volume needed) which means…INDEXING IS FINISHED.

By the way all the large financial planning companies and Private Banks are mostly doing…indexing

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