I'm on record as saying that the end of the US Fed's money printing (a.k.a 'QE') is a bigger deal than the equity markets in both the West and Japan have factored in.
Further, I don't think that the ECB has sufficiently "picked up the baton" from the US Fed. I seriously doubt that they'll be able to expand their money printing efforts much beyond what they've already announced due to pressure from a reluctant Germany.
Germany has already been asked to toss its savings into the very expensive experiment of keeping southern Europe afloat, which has caused much understandable Teutonic indigestion to date. Doing more may well be asking too much.
On the other side of the globe, Japan has done what it can; and yet Abe's hopes for a money printing miracle seem all but dashed at this point.
It's against this monetary backdrop that we note that global demand is anything but robust. Growth in global GDP and consumer demand was supposed to kick in oh-so-many quarters ago, but has not yet done so.
What can we expect when monetary stimulus is removed from inflated asset markets at the same time that global demand is weakening?
Well, that just piles up more risk of a market correction, at least from a fundamental perspective.
Global Weakness Part I: Japan
Japan is the poster child for the limits of money printing. In 2012, Shinzo Abe proposed sweeping new reforms and monetary stimulus designed to lift Japan out of a prolonged economic malaise. Never mind that Japan's increasing elderly population was a strong argument for reorienting the nation towards adjusting to a declining economy was the sensible course of action.
Mr. Abe wanted economic growth, and his program, dubbed Abenomics, was the cure. The famous program called for "2-2-2"; meaning a full doubling(!) of the monetary base, along with a 2% increase in fiscal spending as compared to GDP, and achieving a 2% rate of inflation.
All of this has been running for nearly 2 full years. So the question should be asked, how's it working out?
Not so well is the (very predictable) answer.
Japan Capex Falls as Demand Slumps
Sept 1, 2014
TOKYO—Capital spending by Japanese companies fell 1.8% in the April to June period, the latest data reflecting a slump in demand in the economy following the first sales tax increase in 17 years.
by cmartenson 
