US stocks are riding high on the Fed's generous liquidity, yet the central bank's policy could end up smashing the market. Scott DiMaggio, director of global fixed-income strategy at AllianceBernstein, says the potential risk is that the Fed's actions are weakening the dollar. "The deteriorating fiscal picture with a very aggressive Fed leading to a weaker USD could lead to less appetite for USD-denominated assets -- whether it's equities or bonds," he says. "We are not at that stage yet, but are on a slippery slope."
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