We found little evidence that ultra-low interest rates have boosted equity markets

cohodk

Thats what this report says.



http://www.mckinsey.com/Insights/Economic_Studies/QE_and_ultra_low_interest_rates_Distributional_effects_and_risks

derryb

While the report title mentions QE and interest rates, its discussion is limited to only the affect of low interest rates on equity market performance. One of the faults of pumping money (QE) and even making it cheap to borrow is that it usually only benefits those that have first access to it. There is little question to who these people/organizations have been and where they have put most of that money. ZIRP and QE have been particularly beneficial to the gambling arms of the major financial institutions.

One would have to be blind to not see the affect of the money pump on equity performance. Maybe this is why the report ended its discussion before actually addressing QE. I also question on WHO they are talking about when they refer to investors. Are they including institutional investors or only individual investors? Individuals have not had first access to the "easy" money.

Low interest rates are nothing short of easily accessible money. Unlike putting it directly in the hands of the 1% in the form of QE, borrowed money, even at a low cost, does require something in return - repayment. Could it be that there is enough QE money (at no risk) that there is no need to take on the risk of borrowing money when going into the casino?

Baley

Quite a bit of the money I've made in the stock market this year was invested 2, 3, 5, even 10 years ago, and not one cent of it was borrowed. (and yes, I have been and continue to selectively take profits)

derryb

<< <i>Quite a bit of the money I've made in the stock market this year was invested 2, 3, 5, even 10 years ago, and not one cent of it was borrowed. (and yes, I have been and continue to selectively take profits) >>


Those profits are a result of the the QE flood of money into the market. I would hope no one who reads this forum would ever consider borrowing money for investments.

cohodk

The big banks do not have massive portfolios of equities. They do however have massive portfolios of bonds. The lower rates have boosted the values of these portfolios. The banks are also making a lot of money via the spread between CD rates and Treasuries.

The low rates have also helped real estate value thus preventing more bank failures.

But the banks are not buying, buying, buying the stock market and supporting it. This will be quite evident when the next 20% stock market correction occurs and banks' book values hold steady or increase.

s4ny

Fed liquidity definitely is helping the stock market. But, who cares? You
can sell anytime.

Another new high on stocks today.