Last week witnessed a flurry of policy announcements and economic data releases.  We believe that on balance, the news from last week supports continued upward momentum in US, European and emerging market equity prices, accompanied by relatively stable interest rates.  In contrast, we believe that the Bank of Japan (BOJ) has made yet another policy mistake, and absent a stronger-than-expected fiscal stimulus package, Japanese equities could give back much of their recent gains.

David Fuller's view

Here is The Strategic View.

There are some interesting graphics in this report, from “Contributions to GDP growth” and “Crude Oil Production and Prices – US”.  RiverFront thinks the US economy is stronger than numbers indicate, particularly in terms of consumer spending.

Assuming this is correct, as I do, it will be interesting to see how the Fed deals with the Catch-22 regarding interest rates.  In other words, does the Fed raise interest rates in line with US economic recovery, or does it hold off because the global economy is so soft that Janet Yellen does not want to push the US Dollar Index higher?  I don’t know but many stock markets have floated higher recently on the increase in liquidity from central banks, including the European Union, the UK, Japan and China.  The OEX Volatility Index (VIX) has fallen back to the lower side of its range, indicating that US investors are confident and presumably not expecting higher US interest rates anytime soon.