After Janet Yellen was confirmed Federal Reserve Chair Person in February 2014, she quickly halted the Feds “Quantitative Easing” asset purchase programs. The effect of QE on stocks is visibly discernible in this FRED chart.
Options for stock investors – Pick one:
1. The Fed restarts QE (not likely)
2. Congress passes a “helicopter drop” stimulus bill (less likely)
3. Stocks remain stagnant until economic activity materializes (probable)
Yellen has been a dogmatic proponent of Income equality. She is very unlikely to restart QE. There is no chance congress does anything in an election year and earnings weakness has stock range-bound. You have to believe that the US economy is strong enough to accelerate in the midst of economic weakness across the rest of the planet to be positioned for bullish “risk on” trades right now.