Investing Advice: A Big Week for Central Banks
By: Steve Smith
4. QT vs the S&P 500
Depending who you ask, QE had either little impact or major impact in driving stocks higher over the past 10 years. If QE was helpful, then it stands to reason that QT will be harmful. As the pace of QT steps up through this year, the S&P 500 could end up on the receiving end of the completion of this grand monetary policy experiment as the Fed comes full circle.
- Global Central Bank Balance Sheet Expansion
Finally, for some global context, the major QE banks (The Fed, ECB, and BOJ), are actually all headed in the same direction. Although its worth noting that with Europe and Japan the balance sheets are still very much expanding, but just at a slower pace. For now this is providing some offset against Fed Quantitative Tightening, but the question is for how long.
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