The main focus for the week was on a slew of central bank tightening measures. But Putin’s speech marked an alarming ratcheting up of geopolitical risk. It essentially guarantees months of Putin hardball and associated uncertainty.
And it’s unclear whether the Fed, ECB, or other central banks are prepared to abruptly shift course and orchestrate another concerted QE program to re-liquify liquidity-challenged global markets. And this is a huge issue. The world could now be in the early stage of history’s greatest globalized de-risking/deleveraging cycle – and a global central bank liquidity backstop is not a policy focus.