The KBW Bank stock index has a real troubling look. Bank stocks are rolling over. The bank index is down almost 10% from its February high. Bank of America, the fourth largest component in the index, is now trading below its pre-QE 2.0 price. Wasn’t the Fed’s money printing campaign supposed to inflate asset prices? Indeed it was ,and indeed it has, but if BofA’s price action is any indication of what is to come for the broader market, the Fed’s quantitative easing experiment has failed. And predictably so. Temporary stimulus fueled stock market rallies don’t create sustainable economic growth or permanent increases in wealth.
Jeremy Jones, CFA, CFP® is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Richard C. Young & Co., Ltd. was ranked #10 in CNBC's 2019 Financial Advisor Top 100. Jeremy is also a contributing editor of youngresearch.com.