Tornado Alley (PROG)

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Life Is Getting Harder for Central Banks

The Fed and the ECB are retreating from the business of ensuring market calm.

By Mohamed A. El-Erian
December 30, 2018, 6:30 PM GMT+11

[...]

Yet much of the volatility of recent weeks is due to factors outside the Fed’s control. They include:

* A slower global expansion as both Europe and China struggle to implement of pro-growth policies;

* Other economic concerns, from the partial shutdown of the federal government to trade policy as markets
wait to see which concessions China will offer the U.S. to end the trade war between the two countries;

* Asset prices that, for years, were decoupled from fundamentals amid ample and predictable liquidity; and

* The proliferation of passive investing, computer trading and exchange-traded funds, including some that promised liquidity
in inherently less liquid asset classes, potentially amplifying the risk of contagion both on the way up and on the way down.

It is only a matter of time until the spot light also shines on the ECB.

https://www.bloomberg.com/opinion/articles/2018-12-30/fed-and-ecb-get-blamed-for-stock-market-turmoil