Fed's QE declaration sees continued fragile recovery

ON ASSET ALLOCATION

Cazenove's Joe Le Jéhan says the Fed's latest bout of QE underlines the fragility of the US recovery.

Markets have reacted positively to some better-than-expected manufacturing survey data in the US. But while lagging economic indicators have improved, many leading indicators embedded in these surveys point to tougher times ahead. The declaration of intent from the Fed regarding further QE highlights any economic recovery remains fragile. Unemployment remains high; retail sales growth is muted and renewed pressure in housing cannot be discounted. Moreover, we are sceptical additional QE will have the desired effect of creating sustainable economic growth. Rather, it will distort asset...