It’s no coincidence that our stock market has more than tripled in the last six years, since our Federal Reserve depressed interest rates to near zero in late 2008. The pessimists fear the party is over, now that Janet Yellen and the Federal Reserve have ended the aggressive bond buying to reduce interest rates and promised to raise the benchmark Federal Funds rate. The Upshot The focus on the Federal Reserve’s plans to raise interest rates may be overlooking the renewed vigor of Europe’s quantitative easing. As a result investors should stay the course in stocks, but tilt their portfolios to franchise stocks, boasting of sizeable cash flows and above average dividends, and to out of favor sectors. Don’t Doubt the ECB’s Resolve! The European Central Bank (ECB) is the continental counterpart to our Federal Reserve. It lagged relative to the Fed in response to the sub-prime mortgage crisis. However, as European economic conditions deteriorated, pressure mounted for US style quantitative easing to generate growth and reflate the economy. By the start of this year, full blown quantitative easing plans were instituted, with the ECB promising to buy $60 billion worth of bonds monthly. Euro officials recently advised that the ECB would front load the summer’s planned bond purchases, allegedly to get ahead of an anticipated lack of liquidity during the summer vacation months.

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