Since the financial crisis of 2008 stock prices have only risen when the Fed is either expanding its balance sheet, hinting that it is about to do so, or actively recycling assets to hold down long term interest rates. Absent any of these aggressive moves, stocks have shown a clear tendency to fall. Curiously, while most investors now believe that QE is in the past, few would argue that the bull market is in danger. But a quick look at how much influence the Fed’s operations have had on market performance should send a chill down Wall Street. The Chart below should speak for itself:
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