The Fed and ECB are going to unwind Trump's tax cut long before it even takes effect. As usual, the dumb money didn't get the memo...
"Each day that goes by is getting closer to a change in the flow in liquidity Jan. 2...There's a $45 billion reduction of QE [quantitative easing asset purchases] from the Fed and ECB Jan. 2."
One of the more "interesting" aspects of this pathetic era is how the narrative magically changes based solely upon which stock market sectors are currently leading. During the deflation rally phase, gamblers hang on every word from Central Banks promising more dopium. Whereas, during the fake reflation phase, gamblers tell us that Central Bank tightening is now magically "bullish". All of this asinine chicanery has been encapsulated here by Zerohedge: Are Central Bankers Losing Control?
Parsing the gibberish contained therein, one is struck by the fact that everyone in the economics profession gets to sound smart, even when they offer competing and conflicting theories on the same topic. Which is even more asinine since they are ALL always wrong when it counts the most - at the end of the cycle. They are all caught out at the same time, extrapolating the indefinite asinine into the indefinite future. The notable aspect missing from the above discussion about money printing is any mention whatsoever about 'Conomy, formerly known as "supply" and "demand". That's because we now live in a world of "supply" and "debt". The alchemists of our time have convinced themselves that the addition and substraction of free money is the secret to a strong 'Conomy, regardless of whether we are producing industrial grade machinery or low value-add cappuccinos. We saw this "policy" at work during the last cycle, when about two decades of housing demand was pulled forward into a three year period to paper over mass corporate layoffs. In other words, Central Banks are specialists in subsidizing bankruptcy with short-term liquidity. Liquidity that is the least available when it's most needed.
Which brings me to the point of this post, which is that Central Banks really only have one card left to play which they are now taking off the table - the fake wealth effect. Starting just a few days from now in January, the Fed and ECB will be taking a combined $45 billion of monthly liquidity out of the casino. The most since 2008.
The smart money is prepared for that scenario. The dumb money, not so much.
And those who place their faith in the Plunge Protection Team are apparently the same ones who also believe in Santa Claus...
