On Friday we passed recent observations from BofA Investment Director Michael Hartnett, who concluded that there is only one bull market, namely the credit “and the Fed won’t let you“By this he means all the central banks. As shown in the following table, the balance of central banks G-6 exploded, and the Fed’s total assets are expected to double in 2020 amid an avalanche of money printing. ”
Of course, these are not only central banks: as Hartnett explained, there is also the fiscal bazooka of 2020, which has a path when the huge fiscal stimulus is unleashed after it took three forms in 2020: expenses, credit guarantees, loans and capital,
Hartnett also noted that according to BIS, US and Australian spending are leading (> 10% of GDP), Europe uses aggressive credit guarantees (for example, Italy 32% of GDP), while Japan / Korea is stimulated through government loans / capital injections .
But the most striking fact was when all this developed.
According to BofA estimates, in addition to a record 134 rate cuts since the beginning of the year, the amount the total global incentive, both financial and monetary, currently stands at a staggering $ 18.4 trillion in 2020, consisting of $ 10.4 trillion in fiscal stimulus and $ 7.9 trillion in monetary stimulus – for a total 20.8% of global GDP, introduced mainly only in the past 3 months!
And to think that none of this would have been possible if officials had not collectively decided to turn off the global economy in response to the coronavirus pandemic.
For those interested, here is a complete list of all tax and monetary incentives compiled by BofA: