JAMIE MCGEEVER: The $64-billion question - Are we in a bubble?
'With credit still so cheap and easily available, growth so strong, and volatility and inflation so low, why wouldn’t you load up on risky assets like stocks?'
A decade on from the financial crisis, global monetary policy is finally tightening, with the Federal Reserve raising U.S. interest rates and other central banks gradually turning off the stimulus taps. But despite the “normalisation” underway, there’s a glaring abnormality that should be flashing red to the Fed and central bankers everywhere: financial conditions are easier now than at any point in over 40 years. From an investor’s perspective, though, the flashing light is green, not red. With credit still so cheap and easily available, growth so strong, and volatility and inflation so low, why wouldn’t you load up on risky assets like stocks? The Chicago Fed’s national financial conditions index was last at -0.94, its lowest since April 1976. The Goldman Sachs U.S. financial conditions index is now at its lowest level since January 1990, when it was first compiled. Both indices are widely-used benchmark measures of U.S. - and by proxy, global - financial conditions. “U.S. financi...
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