Policymakers continue to lavish liquidity on the western world. It will be a long time before short-term money-market rates normalize in the US, the UK, Germany or Australia.
But market participants are most vexed about whether we are at the beginning of the end or the end of the beginning. Let me elucidate.
The Standard & Poors 500 index bottomed at 666 in March 2009. In September 2013, four-and-a-half years later, the index stands at 1,630, an impressive increase of nearly 150%. So has this decidedly bullish progression reached an end (that is, the beginning of the end)? Or, now that we have cruised through the previous highs reached in 2008, are we merely positioned on the launch pad (the end of the beginning) and equity markets could embark on another maybe four-year march higher?
I am not an equity expert, but I know that this is the least-loved bull market in my lifetime and I also know that most retail investors and many pension funds are underinvested in equities.
A senior banker told me that the Vodafone deal was a positive sign: "This is the biggest M&A deal post the crisis. So it shows that animal spirits are returning. Also the deal involves a lot of cash coming back to investors, which will have to be redeployed. I actually think markets are normalizing. It seems to be less about risk-on and risk-off with huge correlation and more about fundamentals. Emerging markets are now the biggest issue for me."