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Home / Business / A prominent Wall Street permabear says the stock market is 'stoned on free money' and it could 'prove fatal'

A prominent Wall Street permabear says the stock market is 'stoned on free money' and it could 'prove fatal'



One prominent strategist says the market is high literally and figuratively. Albert Edwards, global strategist at Société Générale, was stoned on free money, "leaving them" detached from reality. "It's a condition that the strategist says could prove fatal," in the end [19659002] US equity benchmarks – and those across the globe – have rooted back from a late-2018 December, 2009, but Edwards says, in a Thursday note, that these gains have been largely aided by central banks that are willing to "inject another dose of euphoria into its market patch."

Indeed, since a Dec. 24 low last year, the Dow Jones Industrial Average

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     DJIA, -0.68%

and the S & P 500 index

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     SPX, -0.66%

have both advanced by about 20% while the Nasdaq Composite Index

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     COMP, -0.68%

has returned about 23%, hence far, as of trading midday Thursday, according to FactSet data.

Easing trade-was tensions between the U.S. and China have saved stocks, but a policy pivot in January sent the most substantial shift in investor sentiment over recent weeks.

The Fed, headed by Chairman Jerome Powell, said it would be more than a $ 4 trillion asset portfolio could conclude as early as the year end of 2019.

Edwards, known for his consistently pessimistic views on the global economy and markets, said signs The more recent accommodative tendencies by the Fed, and the more recent the European Central Bank, the TLTRO, is the source of his concern:

veryEvery major Central Bank in the world has done its bit to inject another euphoria into its market patch. The Fed has been the most visible and dominant dealer, with the screeching sound of the handbrake turn it just pulled. TLTRO, the BoJ Governor Kuroda's promising Japan's parliament would like to deliver more QE if required, and finally the PBoC allowing a record $ 480bn surge in bank loans in January.

Edwards concludes that an investment community has called into question the financial crisis in the financial system. 09 financial crisis could lead to more risk-taking on Wall Street that could lead to a fresh crisis.

For its part, the Fed has made its cross-currencies in financial markets that could lead to the economy and economics outside of the United States.

Read: 'Patient' Fed takes wait-and-see stance as worries about economy grow

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