The headline is actually false. People still do listen to central banks. There still is the feeling that the economic drug dealer still has some cocaine to pump into the system. If investors weren’t listening at all we’d be seeing a much more interesting market.
But investors are listening less. Or perhaps more accurately, investors are listening but are much more dubious. The central bankers have long lost their wizard status, at best they are magicians, and even so people are catching the sleight of hand more and more often.
“After all the QEs, after bond rallies globally, nothing appears to be the antidote to lumbering, low growth both in the U.S. and other developed economies,” Marilyn Cohen, CEO of boutique money managers Envision Capital Management, told clients. “We are looking straight at the Japanification of the U.S.”
Cohen’s advice to clients is representative of a growing chorus that believes central bank maneuvers have run their course.