Ben buys, bulls buoyant; Buttonwood  

Oleh:

[s.n]

Jenis: Article from Bulletin/Magazine
Dalam koleksi: The Economist (http://search.proquest.com/) vol. 404 no. 8803 (Sep. 2012), page 70.
Topik: Economic Recovery; Securities Markets; Investors; Trends; International

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Perpustakaan Pusat (Semanggi) Nomor Panggil: EE29.73 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Like Pavlov's dogs, stock-markets responded to the latest round of quantitative easing (QE) by the Federal Reserve by salivating over the juicy rewards ahead. With the European Central Bank primed to act, and the Bank of Japan (BoJ) beefing up its asset-purchase fund on September 19th, it seems as if equity analysts should give up forecasting corporate profits and concentrate on decoding hints from central bankers. How sound is this latest rally? Research by Morgan Stanley shows that previous rounds of monetary stimulus have had the effect of boosting the valuation of the stock-market (a higher price-earnings ratio) without boosting profits (as measured by earnings per share). In addition, QE has boosted investor sentiment. So one interpretation of the evidence is that QE results in what Fredrik Nerbrand of HSBC describes as a "sugar high"--a rush of blood that does little for long-term economic growth. If that interpretation is correct, then the recent rally should be short-lived as investors once more start to focus on the poor outlook for growth.

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