J. P. Morgan's Chief Investment Officer Michael Cembalest writes (his emphasis):
"A global victory over deflation seems pretty much in the bag at this point, which was the primary goal of Central Bankers back in 2008-2009. Mission accomplished."
This is precisely the sort of bullish proclamation you'd expect to see after nearly 2 years of booming markets following a bust. Meanwhile the velocity of money remains dangerously low after record levels of stimulus.
Deflation is largely psychological. The vast majority of consumers, small businesses, and investors were not bailed out by the Fed, and thus are likely to continue acting differently than the S&P currently suggests.
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