FAST FIVE: Here Is A Breakdown Of The $12 Trillion In Global Stimulus Passed This Month
Here Is A Breakdown Of The $12 Trillion In Global Stimulus Passed This Month A favorite phrase of Bank of America's chief investment strategist, and certainly an accurate one, is that “Markets stop panicking when policy makers start panicking.” Seen in this light, the only question is whether policymakers have panicked enough in response to the current coronavirus crisis which has ground the global $86 billion economy to a halt.
Addressing this question, BofA has calculated the policy response to date, calculating that so far following the “fastest crash, deleveraging, recession, policy panic in history” global policy makers have not only cut rates 65 times so far in 2020, but also pledged some $12 trillion, $7 trillion in monetary and $5 trillion in fiscal stimulus “to reduce volatility and credit spreads, allowing credit to lead vicious bear market rally.” This is as the big five central banks (excluding China) have already bought $13tn of financial assets since Lehman…set to buy further $7tn this year.
BofA's policy tracker puts this in context: If markets conclude that what has been done so far is not enough BofA sees an acceleration toward YCC (Yield Curve Control), UBI (Universal Basic Income), MMT (Modern Monetary Theory), which tell BofA “not that inflation guaranteed to rise but that 2020 sees a multi-year low in inflation expectations”, even thought Deutsche Bank disagrees speculating last week that Helicopter money has set the seeds for hyperinflation.
Unconventional policies become more forceful this week across the Atlantic.
The Fed announced uncapped asset purchases and direct support of the corporate bond market while the ECB geared up the flexibility over purchase limits and country allocations of its Pandemic Emergency QE.