Now it’s Japan’s turn. 

After waxing on last month about a market that is driven by top line revenue growth and earnings, the Bank of Japan joined its European counterparts in setting its key interest rate below zero for the first time. Combined with ECB President Mario Draghi’s hints of more stimulus in March, the world’s central banks ignited a +4% rally in the S&P 500 in the last seven sessions of the month. 

Have the markets become a drug addict, waiting for the next easy-money hit in order to function?  We should find out in February.

Neither the Fed nor the ECB meets next month, which should turn investor’s focus toward economic data and earnings. This timeframe should give investors more clues as to whether the U.S. is entering a recession. Most notably, this Friday’s employment report will give some indication on the health of wage growth, which is critical to consumer spending.

Eventually, the markets will have to support themselves on their own merits, and not by the whim of central bankers. And that day is coming soon.

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