“….But we do have the luxury of knowing that it will come eventually ….” (BoE’s Bean on exit from stimulus, Jackson Hole)
The tone of the Jackson Hole conference over the weekend? A mix of scepticism toward QE, fear of exit, support for market intervention and capital controls… It’s just more evidence to me that the pendulum is swinging to a cooperative, away from the competitive, solution to the world’s financial order which has dominated since the collapse of Bretton Woods in early 70s. Both ECB and BoE confirmed that their move to “forward guidance” was not a change in respective reaction functions (we all are not Woodfordians yet!). Meanwhile, the VIX is cited as the single most important global factor, leading indicator to credit and growth. And let’s admit – Fed has effectively been in the “VIX targeting” regime ever since Lehman – thus any spike will make the ”eventual” exit from stimulus more distant.
Read the full report: Market Research
Nordea