Central Bank Put

The Yellen put is alive and kicking.  So are the Draghi and Kuroda puts.  The stock vigilantes got their way.  They got the Fed to cave in.  The Fed is now considering mulling negative interest rates, and QE4 shouldn't be too far behind.   A rate hike is a distant memory.  Stock vigilantes 1  Bond vigilantes 0.

The most important thing we accomplished on this recent correction is to confirm that the central banks are not going anywhere.  They are here to stay, with interventionist central bank policies at the slightest sign of economic weakness.  We aren't even close to a recession, and the central banks are already feeling antsy about needing to print more money.  This is wildly bullish for equities.  It is slightly bullish for the short end of the yield curve, and slightly bearish for the long end.

Over the coming weeks, you will see the fund managers that de-risked get aggressive on the long side as they feel invigorated by a newly dovish Fed and central bankers looking for ways to pump up asset markets at the drop of a hat.

Earnings don't matter, because if they did, S&P wouldn't be this high in the first place.  It is all about the central banks, and they love to be at the center of the action.