: Market Risk
Market Risk
Stocks Follow Money Printers
The correlation of rising stock prices to extreme money printing and interest rate suppression by post-08 central banks is objectively obvious.
Equally obvious is the impact subsequent rate hike policies (too much, too late, too fast) have had on credit, equity, real estate and financial markets, from Silicon Valley Bank to Credit Suisse. In short: markets follow central bank policies, and those policies are failing.
Market Volatility Ahead
Such central-bank-distorted market highs and lows ultimately lead to increased price swings and hence market volatility against which precious metals have consistently served as a reliable buffer in the past as well as present.
Bonds: No Longer a “Safe Haven”
Traditionally, sovereign and corporate bonds were perceived as a counter-force and/or safe-haven asset to offset extreme stock market volatility. Unfortunately, years of central bank rate manipulations have placed bonds at risk. They fall with, rather than protect against, falling stocks.
Credit markets across the globe have and will gyrate from gross over-valuation to sudden de-valuation, as witnessed throughout 2022-23.