Earlier today consulting company McKinsey, which has now become the new Moody’s, released a 72 page report titled “QE and ultra-low interest rates: Distributional effects and risks” which contains the following pearls of wisdom: “The impact of ultra-low rate monetary policies on financial asset prices is ambiguous. We found little conclusive evidence that ultra-low interest rates have boosted equity markets. Although announcements about changes to ultra-low rate policies do spark short-term market movements in equity prices, these movements do not persist in the long term.” Uhh, does McKinsey have an S&P chart that goes back to 2008? One would think whoever commissioned this report can at least pay for “bigger charts.” Continuing: “Moreover, there is little evidence of a large-scale shift into equities as part of a search for yield. Price-earnings ratios and price-book ratios in stock markets are no higher than long-term averages.”
We will spare any analysis, in-depth or otherwise, of the report: it merits none, and certainly not for those who watch the farce that the “market” has become.
Sadly, by issuing such drivel McKinsey has just tarnished what little reputation and credibility it may have had.
Instead we will just point out, visually, what McKinsey is saying: namely that the chart below which shows the causation between the S&P and the Fed’s balance sheet, doesn’t exist and is purely a figment of overactive realists’ imaginations.
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/3ZKVsxI5i9M/story01.htm Tyler Durden