Photo: Morgan Stanley
Why is everyone obsessed with the end of QE2?Simple, there’s a lot of evidence to suggest that it’s had a strong impact on the market’s behaviour during its run, and that absent QE, things will look at lot worse.
In a new note, Morgan Stanley’s Adam S. Parker, Ph.D writes:
It is possible that we are at the start of a long, capital spending and export-fuelled recovery that would drive consistent EPS growth. This is not our base case, however. Absent a fundamental explanation for the S&P 500 rally (GDP deteriorated meaningfully during Q1), it is natural to consider whether the $600bn Fed asset purchase program (QE2) is a contributor to the rally.