When the Federal Reserve ended its massive bond-buying program (or QE3) last October, the path looked clear for eventual interest rate increases.
But because of stubbornly low inflation and concerns about global economic growth, the Fed has delayed raising rates, most recently last Thursday.
In a note to clients Monday, Bank of America Merrill Lynch's Savita Subramanian writes that if "QE4" were to happen, it would tell markets that all the extraordinary monetary stimuli of the last few years has not been enough.
And this would be bad news for stocks:
"We have noted that each incremental instance of monetary stimulus has been met with diminishing returns for risk assets. We think further easing, or a lack of tightening, in the U.S. is a negative for stocks. The expectation for Thursday's FOMC policy decision was a rate hike and dovish commentary, or no hike and hawkish commentary. Instead, the Fed left rates unchanged and delivered a dovish message. In response, the S&P 500 sold off into the close and was down the next day. As we have noted recently, the biggest risk to equities could be another round of QE-suggesting that $4.5tn was not enough to prop up the U.S. economy. Also, the read across for global risk assets could be that significant liquidity provided by central banks may not always be sufficient to drive markets higher."
Last week, Societe Generale's Kit Juckes noted to clients that as this era of so-called "easy money" that has supported asset prices winds down, all the buying that supported it is also waning.
And according to Subramanian, "the Fed is helping so much it hurts."