Video: Should We Expect the Authorities to Save the Markets?
• Risk aversion has reared its ugly head, and investors are starting to become unnerved by the value slump
• After years of stimulus and accommodative policy, there is naturally a presumption that help will come
• Yet, the usual suspects are less likely to step in - and individual efforts are unlikely to stem the bleeding
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Expecting a central bank, government or regulatory body to step in and prop up the market is not at all far-fetched. Over the years, these groups have offered plenty of help to speculators. And, in turn, 'moral hazard' - the presumption that any risk faced by an individual will be absolved by an outside force - has run rampant. Yet, reason has started to take a foothold. Market participants are more dubious of value to price, they see evidence that the regular rescuers are increasingly reticent to prop speculative positions and there is concern that their influence is well past its peak. With the S&P 500 and other risk appetite benchmarks suffering painful losses to end this past week, it is a good time to reflect on the probability and capacity of a market rescue. We weigh in on the market's autonomy in the face of swelling risks in this weekend Strategy Video.
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