In a moment of brutal honesty, JP Morgan, the nation’s largest bank is admitting what the rest of us have suspected for quite some time: political gridlock, economic disaster, even Covid19 lockdowns are all great for business if you’re Wall Street.
Two simple reasons: 1) a surge in debt which will spur stock price growth as it has for the past century, and 2) if it’s really bad the Federal Reserve will step in and take action.
In fact, this scenario is what we’ve seen play out over the last decade as stocks soar to all-time highs but the economy barely moves. The more dysfunctional our politics, the more the Fed has to step in and take more action – and more power which it in turn never relinquishes.
The Covid19 lockdowns only add to that impetus to take action by the Fed. All of which was admitted quite plainly by JPMorgan’s Nick Panigirtzoglou. “Although it has had a negative impact in the short term, the reemergence of lockdowns and resultant growth weakness could bolster the above equity upside over the medium to longer term via inducing more QE and thus more liquidity creation,” he wrote.
In other words, JPMorgan is finally stating what people have been labeled “conspiracy theorists” for saying for ten years: the worse the economy gets, the better it is for speculative assets because the Fed has no choice but to step in and bail out irresponsible behavior by market bulls.
Read more here.
Photo by Alankitassigments