Virtually everyone in the financial markets agrees that the Federal Reserve's massive easing has played a major role in the five-year bull market for stocks.
But there is sharp disagreement over whether that's a good thing. Jason Trennert, founder of Strategas Research Partners brokerage firm, is one who is wary.
When the Fed is so dominant, "you aren't allowing the free markets to really assert their will," he told
The Wall Street Journal. Some investors are worried the Fed has distorted markets, pushing stocks and bonds to overvalued levels, the paper reports.
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The S&P 500 index carried a trailing price-earnings ratio of 19.25 Friday, up from 18.13 a year ago, according to Birinyi Associates.
To be sure, Trennert doesn't think the party that has seen the S&P 500 almost triple from March 2009 is over yet. That's "simply because there is a paucity of other alternatives," he stated.
"The single biggest risk to a continuation of the bull market in my view is inflation," Trennert noted. "And there are few signs of it being imminent."
Some market participants believe recent signs of economic strength will push the Fed to raise interest rates sooner than expected, putting the kibosh on stocks.
The central bank has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008.
"Interest rates have not been a headwind for some time now," Jim Russell, a regional investment director at U.S. Bank, told
The Associated Press. "We are entering into a period now where they will have to be considered again."
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