Has The US FED engineered a Soft Landing?

Here is a highly interesting commentary on the US Market. Written by Paul J. Nolte, the piece is posted at FSO website: Has the Fed Engineered a Soft Landing?

The following part interests me the most:

• Moving toward the corporate side of the economy (and the more healthy side) the merger and buyout activity has been staggering. A benefit of all the activity has certainly been stock prices – as supply is being reduced faster than the IPOs are able to replace it. The combination of corporate buybacks or buyouts is putting money into investor’s pockets that, given the sharp rise in stock prices, will be put back into stocks. In what can only be called “keeping up with the Joneses," investors (especially the professional ones) have been playing a game of catch-up since the bottom in August. Valuation levels remain elevated and earnings growth should slow (especially if the economy remains cool) and margins may also contract (as wage growth picks up a bit). So why are investors willing to pay top prices for earnings that are likely at or near a peak? The same question was asked in 1997, WELL BEFORE the peak nearly three years later. My contention is that the market is risky at current levels – but that does not say WHEN the markets will turn south. The signposts have been there for some time, but so far ignored – and it could be a while before they are heeded. So for those who have a penchant for shorting the markets – the old adage certainly applies today: the markets can stay irrational much longer than you can stay liquid. We prefer to see the beginning phases of the decline before we jump ship, realizing that to “pick a top” is a fool’s game – better to stay with the trend and take the fat out of the middle.
  
  So corporations are flush with cash, the consumer is slowly beginning to repair their balance sheets and the housing market (so far) has been a relatively contained mess. The odds do not favor a soft landing, as the Fed has only engineered one in the past ten attempts – BUT SO FAR, it looks like it has succeeded. Investors are reacting in the normal way by buying stocks. In fact, we are seeing hedge funds increase their equity weights and those in RYDEX funds shun the short funds. As mentioned above, the market is already at a high valuation and room for a new bull market seems rather small. So, where should investors go for return? How about them bonds? We saw this in the late 90’s as investors piled into stocks and left the safety of treasury bonds. Over the period from 1997 to 2002, even though stocks rose dramatically until 2000, the performance of treasuries clobbered stocks for that five-year period. I believe that a similar period may be at hand. While not exciting, total returns on ten-year treasuries could approach 10% for the next five years as the Fed cuts rates (we haven’t seen a cycle of rising rates followed by a pause and then another rising rate environment – I know there is always a first!), while stock returns may struggle just to be positive.

How?