The most recent dovish comments by Fed Chairman Powell didn’t seem to have the buoyant effect on stock prices that the financial markets have become so accustomed – if not addicted – to. The question is raised around the globe: Will the Fed be able to fix it this time?

Regardless of what really ails the global economy and the financial markets, the world has become accustomed to Fed magic over the past years. A low-volume murmur by any Fed Board member would widely be heard and weighted as good or bad news for stock markets. Dovish murmurs have so far been seen as “good” and translated into noticeable jumps in the markets. Only this time was different: the stock market rallied briefly and then rolled over into the close.

Is it possible that the Fed may have already "gone the distance" last year in response to a poorly timed fiscal stimulus?

Mike Wilson, chief U.S. equity strategist at Morgan Stanley, says the market is skeptical about the central bank’s ability to spur growth. “The Fed likely can’t fix what ails the economy at this point in the cycle,” Wilson wrote in a note Monday. He sees a slowdown thanks to an unwinding of the jump in investment from last year’s tax cuts.

In this context, a recent research report of June 3rd, published by Morgan Stanley, is worth a read. According to the report, there is a decent case to be made for the claim that the Fed really can't fix what is ailing stocks at this point.

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