Wij gebruiken een aantal cookies om u de best mogelijke browserervaring te bieden. Door deze website te blijven gebruiken, gaat u akkoord met ons gebruik van cookies. U kunt hier meer lezen over ons cookiebeleid of op de link klikken onderaan iedere pagina van onze website.
Bullishness rolls on as policymakers tell markets what they want to hear
The bulls keep control
SPI futures are indicating that the ASX 200 will climb another 20 points at the open, adding to yesterday’s bank-led 1.95% rally. Another solid day on Wall Street can also be pointed-to for the market’s start in the green, with US shares continuing their run-higher. Quietness in Asia courtesy of the Chinese New Year holiday has kept some negative headlines way, aiding the bullishness. Global bond markets are steady, gold is off its highs, and credit spreads keep narrowing. Locally, the RBA’s optimism also gave the Aussie Dollar a kick-higher and lifted domestic yields. It’s a risk on attitude, for a multitude of reasons, here and abroad. There’s so much reason to be wary in markets currently; however, the bulls have seen enough to take a gamble in this environment.
Some classic-cases of can-kicking
One lesson from financial markets in the last week: no person wants to be the one responsible for making necessary changes to something in the long-term, if it means inflicting pain in the short-term. It’s a characteristic of human fallibility and is arguably evidence as to why when crises occur, they tend to hurt more than perhaps what is necessary. There is a parallel with what we’ve seen in the US in the last 7 days, and what has transpired in Australia this week. In the US, it was US Federal Reserve Chairperson Jerome Powell wilting under the pressure of Wall Street in his bid to normalize interest rates. In Australia, it was the Hayne Royal Commissions failure to make the necessary systemic changes to improve the nation’s financial system.
An invidious dilemma
When presented with the opportunity to make meaningful, structural change, individuals back away from doing so, to clear themselves of culpability for instigating a crisis. Sympathy to these folks who are handed the crushing responsibility of making these invidious decisions. Surely any other rational person would behave and make choices in the same way if put in a similar position. But removing single agents from the equation, and it becomes the case our human-systems remain tremendously difficult to reform without seeing them collapse first. People are motivated by short-term incentives, it ought to be inferred, and will seemingly (more-often-than-not) act according to those incentives, even if it means perpetuating a system that is dysfunctional, or worse, perhaps even immoral.
No-one wants to be the fall-guy
One can make a blanket, high-level assertion as to why this is so. Our social, political and economic systems are entrusted to people whose mandate is to either ensure compounding prosperity, and a progressive and inexorable improvement of quality of life. When single individual’s take temporary control of a system that will outlast their tenure, they are incentivised to use it to serve their most immediate interests. For the people in power, it doesn’t matter so much that by failing to take responsibility now, they are adding to the grief to be worn by those in the future. It’s better for them to keep the machine rolling and take a gradualist approach of incremental (and superficial) change, even if it means compromising in the future what is being fought to preserved in the present.
No-one benefits (now) from change
But sometimes, like the broken fridge that keeps needing its parts replaced bit-by-bit to keep it alive, it’s better to throw the whole machine out, even it means going without food for a day. The actions we saw out of the Hayne Royal Commission, for one, amounts to the tinkering of the system, without fixing the whole thing. An oligarchy of private banks has proven to be socially disruptive, but to break up what some call the “cartel”, it would mean major financial and economic disruption. Credit growth would go cold, pressuring the property market and the broader-economy that relies upon it; bank shares would depreciate and erode wealth, weighing on people’s future prosperity; and the Government’s coffers would become emptier, meaning it could do less to serve the nation.
When it’s good, it’s fine; when it’s bad, it’s too late
As alluded to earlier, the phenomenon witnessed in the fall-out of the final Hayne Report can also be seen in the decision-making of the US Federal Reserve recently. For years, global asset markets have prospered courtesy of the innovative practices central banks have used to support a system that is disposed towards chaos. The pain of making true systemic change is deferred, to keep in place order and stability in the present. When it becomes necessary to unwind some of these practices, when it is justified, if not necessary, just like we have seen in the US recently, the prospect creates convulsions and disarray. Although it’s known that long term objectives will be compromised by short-termism, immediate self-interest once again comes to the fore, and bastardizes the process.
Instant Karma is (not) going to get you
So much of what happens in financial markets is driven by short-term benefit, in the (often) naïve hope that when things turn truly bad, you’re not the one left carrying the can. Hence why Wall Street has rallied the way it has since the Fed took its dovish turn last week, and why the banks (and therefore the entire ASX) experienced its extraordinary rally yesterday. Market participants are enjoying their spoils now, in the knowledge that if they don’t, they’ll miss-out on the opportunity to take a slice of the good times while they are still on the table. It’s well known certain things need to be fixed, but no one wants to forego short-term benefit, or be the one responsible for bringing about short-term pain, so the system rolls on.
Deze informatie is opgesteld door IG Europe GmbH en IG Markets Ltd (beide IG). Evenals de disclaimer hieronder bevat de tekst op deze pagina geen vermelding van onze prijzen, een aanbieding of een verzoek om een transactie in welk financieel instrument dan ook. IG aanvaardt geen verantwoordelijkheid voor het gebruik dat van deze opmerkingen kan worden gemaakt en voor de daaruit voortvloeiende gevolgen. IG geeft geen verklaring of garantie over de nauwkeurigheid of volledigheid van deze informatie. Iedere handeling van een persoon naar aanleiding hiervan is dan ook geheel op eigen risico. Een door IG gepubliceerd onderzoek houdt geen rekening met de specifieke beleggingsdoelstellingen, de financiële situatie en behoeften van een specifiek persoon die deze informatie onder ogen kan krijgen. Het is niet uitgevoerd conform juridische eisen die zodanig zijn opgesteld dat de onafhankelijkheid van onderzoek op het gebied van investeringen wordt bevorderd, en dient daarom als marketingcommunicatie te worden beschouwd. Hoewel wij er niet uitdrukkelijk van weerhouden worden om te handelen op basis van onze aanbevelingen en hiervan te profiteren alvorens ze met onze cliënten te delen, zijn wij hier niet op uit. Bekijk de volledige disclaimer inzake niet-onafhankelijk onderzoek en de driemaandelijkse samenvatting.
Live prijzen op de populairste markten
Mogelijk bent u geïnteresseerd in…
Dankzij onze transparante kostenpagina ziet u gemakkelijk de kosten die met uw trades gemoeid kunnen gaan.
Ontdek waarom zoveel klanten ons kiezen en wat ons de grootste CFD-provider ter wereld maakt.
Blijf op de hoogte van gebeurtenissen die de markten kunnen opschudden dankzij onze aanpasbare economische kalender.