“I'm not lost for I know where I am. But however, where I am may be lost.”Submitted by DeDora Capital on August 26th, 2016
by Will Becker, AWMA/AIF
The National Park Service turns 100 years old this week, and they are celebrating by making entrances to all national parks free of charge between August 25 and August 28 - so go enjoy the great outdoors this weekend!
One of the many joys of having a 5 year old kid is that I have every possible excuse to read kid’s books. So the other day I was reading Winnie the Pooh, and in the scene Winnie says “I'm not lost for I know where I am. But however, where I am may be lost.” That’s it! That’s what Interest Rates and the current European Equity markets are doing! Just because I-know-what-they-are-doing doesn’t mean what-they-are-doing is any less crazy.
So with Winnie the Pooh in mind, here is an homage to seeking truth from a variety of sources. While, as the cartoon below says, “The wise man seeks truth far from Central Bankers,” it makes an awful lot of sense to watch what those Central Bankers are doing. In investing, we have a related saying: Don’t fight the Fed. If the Federal Reserve (or Central Bank elsewhere) is going to insist on propping up the economy, it’s usually best to surf that wave. Central Banks can be catastrophically wrong and they certainly disagree. But when they pump $1B into a $16T economy such as the European Union… it’s worth noticing. Especially when the European Central Bank decides to branch out from sovereign debt, and buy $20b in Corporate Debt in three months. It is also worth paying attention to whether they are painting themselves into a corner (cartoon #2 below). With that in mind, I couldn’t help but notice when the head of credit strategy at Citi asked central banks to "think not of potential, but of sustainability."
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