Take advantage while it lasts, because one thing is for sure is that something will eventually happen that will shake investor complacency at heart, although it is impossible to say what it might be until it does. actually produce.

The big “known, unknown” is inflation and interest rates, a threat that is aptly summed up by Neil Shearing, chief economist at Capital Economics, in the following terms.

“Asset markets can accept a slight increase in interest rates on the heels, especially if this occurs against the backdrop of a strong macroeconomics. But if markets start to believe that central banks have fallen behind the inflation curve and that a bigger response is needed, a bigger shake in the markets would surely follow. “

As it stands, major central banks appear stubbornly resistant to pressure to raise interest rates, knowing that any undue tightening risks collapsing not only the stock market casino, but the economy as well. real.

Bets against the pound hit their highest level in over a year on the assumption that the Bank of England will soon be forced to abandon its somewhat curious strategy of warning of higher inflation and hikes. rate to come while doing nothing by coincidence.

The danger of this approach is that when the Bank does finally act, it will be forced to brake in a much more severe way than not, which will end the economic recovery. The political challenge is similar to both the US Federal Reserve and the European Central Bank.

It may have been inevitable, but the default policy of countering any bad news with a new wave of quantitative easing has plunged the world’s major monetary authorities into a terrible mess; they are on a conveyor belt from which there seems to be no way out.

In a speech this week to the Institute for International Monetary Research, Lord King, former Governor of the Bank of England, said the central bank’s continued printing of money had become “unsustainable.” Yet “the challenge of reducing the size of these balance sheets in an era of large budget deficits is obvious.”

Indeed yes. Rarely have public finances seemed so dependent on easy money for central bank support as they do today.