A tsunami of liquidity is coming to the financial system.
Globally, central banks have begun the next major easing cycle with a jaw-dropping 320 rate cuts already implemented since the cycle began a mere 24 months ago. And every major central bank is now easing:
- The European Central Bank (ECB) has already cut rates eight times.
- The Swiss National Bank (SNB) has already cut rates six times, taking them to zero.
- The Bank of England (BoE) has cut rates five times.
- The Bank of Canada has cut rates seven times.
- Even the Fed, which chose to play political games for most of this easing cycle, is cutting rates, with five rate cuts.
In the very simplest of terms, the cost of money/ credit in the financial system is dropping rapidly. And this is happening at the same time that central banks AND governments are flooding the financial system with new money.
Japan just announced a new $110 billion stimulus program.
China plans to spend $1.4 trillion in stimulus
The U.S. is talking about sending out $2,000 stimulus checks to every American with an income under $100,000. And there are rumblings about a “DOGE Dividend” of $5,000 as well.
On top of this, central banks are about to fire up the printing presses again. Both the Bank of Canada and the Fed have ended or will end their Quantitative Tightening (QT) programs soon.
Both banks will launch QE (the process of printing new money and using it to buy assets) soon after. The ECB, BoE and SNB aren’t far behind on this either. One whiff of asset price deflation and they’ll all be printing money too.
So again, a tsunami of liquidity is coming to the financial system.
The time to prepare for what this means for the markets is NOW before this happens.