Daily: Easy money shifts private portfolio preferences and increases risk-taking

For most market watchers, it shouldn't be a surprise that easy money has an (intended) effect on markets in increasing risk appetite as 'risk-free' returns diminish. This cycle is no different. A number of today's articles point to a resurgence in risk amid a global economy awash in money that has brought risk-free rates down to negative territory.

Rather than perceive this dichotomy as some sort of market anomaly, we should look at it as the suppression of real returns which it is. Central banks globally are engaged in extreme levels of financial suppression to re-animate animal spirits and get credit flowing so that we can resume business as usual. These actions have impacted credit markets and boosted asset prices. For example, in the US, the housing market is clearly in a cyc...


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