In contrast, the real economy rarely provides immediate validation of a new consensus. In the current environment, investors are concerned that high levels of consumer debt represent a major obstacle to any reacceleration in the pace of economic activity. Our view is very different. Things are not different this time. Investors are simply too impatient.
Monetary policy works with a lag.
Historically, this lag has been 6-12 months. The first cut in the target federal funds rate only took place on January 3rd. Monetary policy, of course, is not the sole factor shaping the performance of the economy and the financial markets. Investors making decisions in real time need to take myriad factors into consideration. The market itself is one of these.