Operation twist is scheduled to end, and the Fed seems intent on replacing it with a program of buying longer-term U.S. Treasuries. Now more than ever, there seems to be a dramatic divergence between the paths of monetary and fiscal policies.
Whereas global equity market returns have been driven largely by central bankers and geopolitics since the 2008 collapse of Lehman Brothers, respondents to this week’s poll expect monetary policy and geopolitics to have a diminished influence on stock prices in the next 12 months.
Earlier this week, we asked readers, “Is Germany, Finland, and the Netherlands’ objection to using the European Stability Mechanism’s bailout money to purchase existing bad loans appropriate?” More than 70% said these nations’ objections were appropriate.
In normal markets, investors would find the suggestion of raising interest rates in a weak economy about as daft as holding a TV antenna in a thunderstorm. Yet, after five years of “stimulative” monetary policy, this week's survey results suggest that investors are ready for a radical departure from economics orthodoxy.
Germany may well be experiencing a real-estate bubble — and the explanation is straightforward: the European Central Bank has lowered rates in response to the global financial crisis that began in 2008, and then dropped rates dramatically in response to the euro crisis, which didn't gain steam until late 2009, and then pushed rates near zero in late 2011 — where they have remained.
When it comes to the European and U.S. debt crises are we nearing the dénouement — or still in the opening act?
At the Financial Analysts Seminar in Chicago earlier this week, Rick Rieder (pictured left), managing… READ MORE ›
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