Whilst it is an open question as to whether QE and monetary stimulus is helping the global economy (I don’t believe it is), there is no doubt that stock markets love it. And that’s where all this central bank “free money” is heading. Global stock markets are riding the QE wave. The Shanghai Composite has just hit a 7 year high this morning. Japan’s Nikkei 225 is at a new 15 year high. Having closed above 19,000 last week for the first time since April 2000, it will likely break the 20,000 barrier before the week is out, the speed with which the market is advancing. And in Europe Germany’s DAX index is at a new all-time high closing above 12,000 for the first time ever yesterday. The German market is up an astonishing 24% so far in 2015, boosted by the ECB’s 1.1 trillion euro QE program. And in the US the Dow Jones is just 1.5% or 300 points away from its all-time high. I wouldn’t want to bet against it being there by the time the Fed finishes its monetary policy meeting on Wednesday night. As investors appear to like large round numbers, what are the odds of the Dow being at 20,000 before long, especially if Janet Yellen releases a dovish FOMC statement on Wednesday night? However, what happens when the central banks’ largesse finishes and the flow of “free money” dries up as it surely will one day? What will hold the worlds’ equity markets aloft then? It seems to me that 90% of global stock market moves are now dependent upon the central banks and the biggest moves occur around central bank meetings and statements, QE programs, and rate cuts/stimulus or anticipation of rate cuts/stimulus. Market sentiment as measured by bulls vs. bears is at all time highs in some markets (see the Investors Intelligence Survey as an example) as bearish investors have been almost entirely driven from the market place. So the central banks are now in control of the world’s stock markets and almost nothing else matters. Whilst that seems great for now, I suspect that one day in the not so distant future, it won’t look so good.