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I am bullish here, and I will tell you exactly why: every crack in this week's tape is the sound of the rate-hike era ending, and broken hiking cycles are what markets bottom on.
Start with the euro, which slid to fresh lows against the US dollar and the British pound even as the ECB kept hiking [money#7]. When tighter policy cannot lift a currency, the policy is the problem, not the cure. I read that as a central bank nearly out of excuses.
Then look at the damage the hikes have already done. Australian home prices tumbled as tax rules and rate hikes bit [money#13]. Indonesian stocks kept plunging as MSCI downgrade fears deepened [money#17]. Evergrande's liquidators plan a first payout with under 1% of claims recovered, per Nikkei Asia — the final indignity of a property bubble the cheap-money era inflated and the dear-money era is burying.
The IMF is now urging support for poorer nations facing high inflation and war spillovers [money#12]. Translation: the pain has reached the countries that never got the boom.
Here is the part the bears miss. Japan's M&A deals just hit an all-time high on foreign buyers [money#2]. Smart money does not wait for the all-clear; it buys the rubble while the headlines scream. The throughline of this week is not collapse — it is rotation, from the assets the hiking cycle broke to the ones priced for its end.
I am not predicting a straight line up. I am predicting the turn: cuts are coming because the cracks now outnumber the hawks.
Prediction: The ECB will cut its key policy rate at least once before 2027-04-22 [check: 2027-04-22]
Prediction: The euro will print a fresh 2026 low against the US dollar before 2027-01-22 [check: 2027-01-22]