The bull market rally in the S&P 500 (^GSPC) that began on March 9, 2009 turned seven today, making it the second longest bull market since World War II.
But while the rally has returned about 190% to investors, it is one of the least loved and least trusted.
One of the reasons why the run may be one of the most hated is the amount of financial hocus-pocus required to boost the markets since 2009.
As Bank of America Merrill Lynch’s Michael Hartnett points out, the surge in market indices has been accompanied by the following:
- 619 global interest rate cuts
- $10.4 trillion worth of asset purchases by central banks
- $9 trillion worth of global government debt (or about one quarter of all government debt in the world) yielding zero percent or less
While the market as a whole may be up, the impact of near-zero and sometimes negative interest rates is reflected in the underperformance of banks.
The contribution to the rally from financial engineering has dominated any signs of broad demand or profit growth.
Ahead of Thursday’s ECB meeting where more stimulus is expected from Mario Draghi, the role of central banks’ contribution to the rally remains top of mind.