The joy ride for stocks from central banks is over, says strategist

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Need to Know: Central-bank boost to stocks has exhausted itself, says strategist

Of course, no one is talking about the “bomb cyclone” storm sweeping through the central US but the incoming earnings storm. Given that Wall Street has set the bar so low for results, companies may just drag themselves over it. The fun starts with J.P. Morgan and Wells Fargo WFC, -0.73% on Friday, following by Goldman GS, +1.18% and Citigroup C, +0.49% on Monday, with Netflix NFLX, -0.22% and a bunch of others also rolling out ahead of the Easter break.“...the U.S.

Pundits have been telling us for a while that central banks can’t keep rescuing this stock market after years of easy-money policies, though the Fed managed to do just that at the start of the year. In Wednesday’s minutes from its March meeting, the U.S. central bank showed no indication of any cuts to come, with some members even saying they’d consider a hike, depending on data. The market is almost even on the chances of a cut vs.

Last word goes to asset manager Guggenheim Investment, which told clients in a recent research note, that they aren’t expecting a savage recession, but stocks could get crushed due to lofty valuations and one more thing — lack of central bank firepower.The market Dow US:YMH9 , S&P 500 US:ESH9 and Nasdaq US:NQH9 futures are modestly up. On Thursday the Nasdaq COMP, +0.69% led a higher day across the board, with the Dow DJIA, +0.03% and S&P 500 SPX, +0.35% also gaining.

“The valuation extremes we are witnessing today are more pervasive than anything we have seen before. And it’s clearly the result of the greatest volume of price-insensitive buying we have ever seen before, namely stock buybacks and the widespread adoption of passive investing,” says Felder. Read the full blog here.

 

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