And with the Fed announcing a 50 bps interest rate cut last week and signaling additional rate cuts in 2024 at the same time as China announced a massive stimulus package, asset prices are expected to see a continued surge higher until an inevitable ‘Minsky moment’ as investors scramble to protect their purchasing power before the global fiat house of cards finally comes crashing down.
“The Fed rate-cut cycle will likely continue,” wrote Lacalle. “However, this will also continue to erode confidence in the currency and international demand for government bonds, perpetuating the U.S. dollar’s loss of purchasing power.”