The market has been indifferent to my thesis of slowing economic and profit growth. Also, with the Fed, the Bank of Japan, the ECB and the Bank of England all in, the lift to valuations from easing -- I had thought (again, incorrectly) -- should have been completed a while ago. As I have noted in the past, at least in the U.S., the benefits of quantitative easing are fading; they might even begin to produce a negative net-net impact on aggregate growth as the savings class gets robbed.
The Free Lunch
Current monetary policy is an easy way out, removing the near-term need for our leaders in Washington, D.C., to make more difficult decisions through the implementation of responsible fiscal policy. There are unintended consequences and, I thought, no free lunch. Not only does zero interest rate policy dismantle retirees' income from savings, it forces them into risky assets at the wrong time of their lifecycle because of the lack of alternative investment opportunities. Yet, the market has not cared. Too aggressive monetary policy is not trickling down into the real economy -- rather it is serving to widen the schism between the haves and the have-nots, which was reflected in Wal-Mart's ( WMT) weak quarter. Yet, the market has not cared. In essence it has been and remains my view that the Fed is pushing on a string, shouldering too much of the responsibility to sustain growth and that money printing is likely to fail to revive the real economy. I incorrectly thought that market participants would react negatively to the domestic (real) economy's failure to revive even in the face of unprecedented monetary stimulus, similar to when investors abandoned the gold market at its price peak in 2011 and/or when an Apple's ( AAPL) share price top was reached at $700 in 2012. Money printing aimed at producing higher inflation (which could allow the world economies to grow out of their debt problem in a painless way) worked after World War II, owing to the reconstruction and pent-up demand in the system. But the framework this time is completely different and, I felt and continue to feel, could do more harm than good.