Tags: Bass | central | bank | policy

Bass: World's Central Banks Are Going Their Separate Ways

By    |   Wednesday, 22 October 2014 08:51 PM

Central banks, which have been easing in unison since the financial crisis began six years ago, are now starting to break off in different directions, says hedge fund star Kyle Bass, founder of Hayman Capital Management.

The Federal Reserve is expected to announce an end to its quantitative easing program at its meeting next week. 

However, the Bank of Japan, which also meets next week, will stick with its stimulus, as it seeks to pull the economy out of its torpor, Bass told CNBC. Japan's economy shrank at a 7.1 percent annual rate in the second quarter.

Meanwhile the European Central Bank will "go all in to arrest their deflationary environment," he said. The eurozone's consumer prices rose only 0.3 percent in the 12 months through September.

As for Japan, with its hefty budget and current-account deficits, it's "going to have to buy more bonds, and the U.S. is going to buy no more," Bass said.

"So when the training wheels come off the market in central-bank-land, macro[economic developments] become functionally much more relevant."

Meanwhile, James Bianco, president of Bianco Research, says the Fed is hard at work boosting the stock market.

"They [Fed policymakers] are afraid of the [stock] market going down and getting blamed," he told MarketWatch. "They are definitely in the market-manipulation business, and nothing has changed."

If the stock market plunges, the Fed will revive its bond purchases, he said.

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Central banks, which have been easing in unison since the financial crisis began six years ago, are now starting to break off in different directions, says hedge fund star Kyle Bass,founder of Hayman Capital Management.
Bass, central, bank, policy
255
2014-51-22
Wednesday, 22 October 2014 08:51 PM
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