Viewpoints
Opinion

Markets Need More Than a Rate Cut to Go Back to Bullish Mode

Rate cuts may not be enough to send markets to new all-time highs. Money supply growth and quantitative easing are needed to maintain these valuations.
Markets Need More Than a Rate Cut to Go Back to Bullish Mode
Traders work on the floor of the New York Stock Exchange during afternoon trading in on Aug. 5, 2024. Michael M. Santiago/Getty Images
Daniel Lacalle
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Commentary

The recent market weakness suggests a combination of profit-taking and concerns about the latest U.S. jobs and manufacturing figures, added to the abrupt unwinding of part of the yen carry trade. Valuations had soared, and market participants now demand central bank easing. However, rate cuts may not be enough to send markets to new all-time highs. Money supply growth and quantitative easing are needed to maintain these valuations.

Daniel Lacalle
Daniel Lacalle
Author
Daniel Lacalle, Ph.D., is chief economist at hedge fund Tressis and author of the bestselling books “Freedom or Equality” (2020), “Escape from the Central Bank Trap” (2017), “The Energy World Is Flat”​ (2015), and “Life in the Financial Markets.”