The economic news is becoming increasingly dense. The "double deep", as many fear, seems to approach every day. I must admit that the situation is quite amusing
most economic indicators are deteriorating U.S. and European financial markets and rising.
It may sound surreal but it is not that much. Indeed, the economy deteriorates more and more hedge funds and banks are speculating on a second wave of "free money" that can be used at leisure on the various financial markets (mainly raw materials) without paying interest. Better still if we take the case of the USA, banks can borrow at 0.25% and invest in T-bonds at 1.03% a year more to see 10 and 30 years. The European crisis of confidence had come to disturb this little game with emphasis on the fact that Treasury bonds of a country like Greece are not without risk and that a country can also go bankrupt.
Another factor in rising markets is greater intervention by central banks in different markets, whether on the exchange (like last week in Japan) or even on the derivatives markets as that is the case FED USA. Obviously, all this comes at the cost of having high inflation in the medium term because we must not forget that unless we managed to remove all this liquidity when the time comes you can watch the total depreciation of the dollar but who cares finance today behaves from day to day and we are forced to do the same.
Alexandre Letourneau
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