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Markets are set to open higher today, following 1% gains in Europe. There is talk of “Helicopter” money in Japan, and the first post-Brexit Bank of England meeting with expectations of a rate cut there.
The post headline I chose reflects this metaphor — the market’s ‘reality‘ has been ‘augmented‘ by central bank action around the world.
We have looked at this macro-factor as driving equities higher, and have not shied away from owning them. Others have either a) not made that calculus; b) been so offended by the interventions they refuse to participate; or c) fear the central bank end game, when reality is no longer augmented, and who knows what will happen.
Lately, I have been trying to see if this framework applies to various market conversations — either pundits chattering on TV, people at conferences, or prospective clients. The metaphor is useful, because it creates an easily understood reference point as to which narrative is being embraced by individual market participants.