Before I get all "macro" on you, let's be reminded that over
half of the movement of your favorite stocks can be attributed to
the economic and market environments, and their overall impact on
sectors and industries.
I want to hear what investors think about a BIG
macro trend that definitely makes a difference to sell-side
economists and equity strategists running hundreds of billions:
We know it has been Ben Bernanke's goal to prevent deflation
and avoid the specter of a Japan-style malaise which they are
still mired in. I have always applauded him for his vision and
conviction on this.
But we have to wonder how well is it working now and how
much influence will QE policies have going forward, especially
since the US's own austerity battles (i.e., the "fiscal cliff")
don't leave much room for more economic stimulus.
I think they have done much to prevent a deflationary spiral.
But two things lately are making me wonder if there are larger
deflationary forces at work which even unlimited money printing
cannot cure: 10-year Treasury yields dropping back to 1.6% and
stocks failing to hold above S&P 1,400 since QE actions
from both the Fed and the ECB.
My big question is this: How serious is the deflation threat
and does it mean stocks will be under pressure into 2013?
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