Ive seen the graph comparing the fed balance sheet from QE and the S&P 500.
But is QE really directly the cause of this year's bull market?
I mean, they've been doing QE for a few years. But the stock market didnt really move much. This year is unique in that almost everything rose. Its like it came alive in 2013.
So my question is, is QE really the driver behind the stock market?
Or is it fundamentally a lot of hot money flowing into the market this year from funds around the world. And like party hoppers, once they are done here, they hop onto the next market, leaving this one to fall and the others to rise -- that is regardless of any more QE?
Its a pack mentality. Once people start leaving, everybody leaves. You can keep 0% interest rate, keep printing money all you want. When big hedge funds from around the world are not buying your stocks and selling, it goes down right?
They keep pulling up that chart of Federal Reserve accommodation programs from 2009 and the equity markets-trying to make a causal relationship-what if there is no causal relationship whatsoever? That it is merely a consortium of financial institutions and funds working in concert to promote the idea to conceal their hyper debt leverage speculating? Note margin debt has also risen along with the equity markets and now to an all-time record. Hint: Let's keep trying to sell the idea that the Federal Reserve's accommodation program bid up asset prices-never mind the unprecedented debt leverage taken on during the period.
Indirectly I suppose by keeping interest rates low and making dividend yields more attractive, thus driving money toward stocks. Also more directly if the banks are using the fresh liquidity to buy equities. Then the risng market gets the attention of the herd and they jump in, apparently partly on the back of margin debt. So if any of this is correct, you could say QE, an intended consequence or not, has some influence on the rising stock markets.
QE forever is the catalyst, and funds chasing performance is the result. QE will never end but something somewhere will spark a change in sentiment from extreme complacency to concern. Your guess is as good as mine as to when.