Monetary Policy Has Done All It Can, More Fed QE Coming
Monetary policy has done everything it can unless the Fed put additional QE into the US economic system .
The Fed is not helping much in the sense that ultimately determines whether or not the nation getting an effect from the QE’s beyond increasing P/E ratios in the stock market.
“There’s no real evidence that we’re getting an impact on lending and on the economy picking up,” the former Fed Chairman Alan Greenpan said.
Meanwhile, Japanese and European policymakers have pushed some Key rates into negative territory. But negative interest rates “hurt in the sense that financial intermediaries require positive interest rates, but I wouldn’t blame it on the negative interest rates, I’d blame it on the policies that got us to where we are,” Mr. Greenspan said.
Anemic productivity growth and flagging corporate profits can be traced to too much entitlement spending as the world’s population ages, Mr. Greenspan explained.
“If you look at it in a bookkeeping sense, it’s because gross domestic savings, everywhere across the spectrum — the political spectrum — has been severely undercut by social benefit increases in virtually every single major country,” he said.
Seeing a weak economy and struggling middle class, the Fed is considering measures to stimulate the economy. In a speech earlier this week, Janet Yellen, Chairwoman of the Federal Reserve, said the Fed has “considerable scope” for stimulating the economy, hinting that something akin to the Quantitative Easing programs of the late 2000’s and early 2010’s may be in the cards in the near term.”
“For now, market onlookers are left wondering why equity investors are choosing to stay with the Fed when time and time again the Fed’s promises of forecasted growth have fallen short, and their policies has failed to deliver a lively rate of fundamental economic growth,” one analyst I read wrote Friday.
Friday (options expiry) the US major stock market indexes finished at: DJIA -28.97 at 17897.46, NAS Comp -7.67 at 4938.22, S&P 500 -2.05at 2080.73
Volume: Trade was heavy with over 1-B/shares exchanged on the NYSE.
- NAS Comp -1.4% YTD
- Russell 2000 -0.4% YTD
- S&P 500: +1.8% YTD
- DJIA +2.7% YTD
DIA 178.93 Bullish (0.32) Support 178.81 Resistance 179.74
SPY 207.96 Neutral (0.23) Support 206.66 Resistance 208.36
QQQ 111.02 Bullish (0.39) Support 109.41 Resistance 112.41
Have a terrific weekend.