Ghost of Igloi wrote:
No, the trend is down and central bank policy will be ineffective. Besides QE 4 would likely cause widespread panic in an over indebted world.
Neither QE 2 nor QE 3 caused widespread panic in their respectively over-indebted worlds.
I do agree that equities are still overpriced. Look at the gains just last calendar year, and think about what drove them. Were the companies really intrinsically 25% more valuable at the end of 2017 than at the beginning?
No, when a stock is considered a claim on part of a revenue stream. Remember 2014? Recent year’s gains have been off-the-charts, historically...and yet “we” have been conditioned to accept them as normal, as expected, as reasonably easily repeatable.
I repeat: this managed withdrawal has been very orderly. Everybody has had PLENTY of time to minimize their losses, even since the start of the current trend in October, and yet the majority continue to accrue paper losses—and still do nothing. Passive. Wait until the funds really get in gear, especially mutuals when daily closes happen at session lows.
The zeitgeist of the immediately prior age, that markets can only always rise over time, was very easily adopted by everyone because they didn’t consider what/who was making markets rise this time. Similarly, the new age in which pessimism rules, has been fairly quickly adopted.
The thing that average people (and in that I include more than a few professional managers) fail to understand is how they are being used. TPTB make money whether markets rise or fall—the important thing is movement. Recent events are really no big deal, yet. Buybacks and non-GAAP continue, even accelerate.
Consider this: what happens down the road, when (if things continue as they are) the shtf and the US Fed is the only CB in the world with any significant “dry powder”?