First Trust economists advise investors to “ignore the central banks”

First Trust economists advise investors to “ignore the central banks”

First Trust economists advise investors to “ignore the central banks” As finance professionals and investors continue to base caution-oriented financial decisions on the actions of central banks like the Fed and the European Central bank, one group of economists makes a bold statement: just ignore them.

In an economic commentary piece published on the First Trust Portfolios Canada website, three of the company’s economists have opined that the Fed is responding too weakly to monthly U.S. employment numbers, which is affecting the already bearish financial markets.

“Before the May jobs report (released June 3rd), most thought the Fed would hike rates by July. But after the May jobs data, and even though Janet Yellen went out of her way to emphasize that the Fed doesn’t put too much weight on any one economic report, the market knew a July rate hike was off,” the piece says.

“Some are spinning the July 287,000 jobs report as a ‘relief’ to the Fed, but this only makes sense if somehow the Fed were thinking of cutting rates, but chose to ignore the weaker than expected May jobs data thinking things would get better. In other words, the Fed’s indecision and wobbly-knees are creating uncertainty and an environment of fear.”

Citing the ineffectiveness of moves such as quantitative easing and negative interest rates in relieving economic malaise, the commentary calls on the private sector to initiate a rally.

“[I]t’s not central banks that create wealth, it’s entrepreneurial vigor… The Fed has never written an App. It may use the Cloud, but it didn’t build it. Remember this the next time the financial press obsesses about the next move, or lack thereof, by the Fed, the European Central Bank, Bank of England, or Bank of Japan. It hardly matters at all. And, besides, it’s time wasted that’s better spent analyzing companies. That’s what ‘investors’ do.”


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