Art of investments


Investment Outlook 2014

Feb 2, 2014

Investment Summary

  • Despite fears of currency debasing QE, the “fiscal cliff”, sequestration, etc., the US economy is showing a steady stream of positive data with 3.2% GDP growth.
  • The Fed, ECB, BOJ and other major central banks have chosen to create negative real interest rates to inflate assets, spur  economic growth, depreciate currency and debt stock.
  • Fiscal austerity has been ineffective.
  • The ECB’s LTRO was helpful, but it was just quasi-QE. 
  • The BOJ has the largest QE program on a GDP weighted basis at $72bn/m
  • The Fed has extended easy money to 2015, with QE3 + Twist = $85bn/m - $65bn/m
  • The SNB is printing CHF, accumulating $461 bln FX reserves and other assets.
  • Excess MS and low rates have reflated asset valuations without real demand.
  • Markets have rallied where policy rates are lowest or QE is largest.
  • But how long can QE and/or Easy Money continue?
  • How long can assets reflate without real demand?

icon_pdf.gif   Full version of the report could be found attached.

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