The Federal Reserve’s easy monetary policy and the spike in the pace of inflation have left investors with negative real interest rates, which are fuel for asset bubbles, warned the chief investment officer of Morgan Stanley’s wealth management division.
Last week Fed Chair Jerome Powell stuck with “a policy of patience” on the timing of raising its benchmark interest rate, she said, describing the outcome of the central bank’s policy meeting as “decidedly dovish, especially given the chair’s ebullient economic outlook.” “Risks of a market bubble are growing,” Shalett said. She suggested that investors “watch labor market data, valuations on 2022 forward earnings and fear/greed positioning gauges, which are closing in on extreme overbought conditions.”
“The Fed will reduce monthly $120 billion purchases of US Treasurys by $10 billion a month and $5 billion a month for mortgage-backed securities, signaling its intent to leave interest rates essentially unchanged until June,” Shalett wrote. “Almost on cue, equity investors marked the central bank’s commitment to “lower for longer” rates with yet more new all-time highs, leaving valuations stretched.”The U.S.
Ahh Lisa, when you do not get easy money from FED you cry. Imagine if you have problems, what the average investor had to weather since GFC because by bailing out banks savers have been crushed
Ya, no kidding Einstein.
good luck