Posted on 03/13/2016 9:32:47 AM PDT by Lorianne
The bull market just celebrated its seventh anniversary. But the gains in recent years – as well as its recent sputter – may be explained by just one thing: monetary policy.
The factors behind that and previous bubbles can be illuminated using simple visual analysis of a chart.
The S&P 500 (^GSPC) doubled in value from November 2008 to October 2014, coinciding with the Federal Reserve Bank’s “quantitative easing” asset purchasing program. After three rounds of “QE,” where the Fed poured billions of dollars into the bond market monthly, the Fed’s balance sheet went from $2.1 trillion to $4.5 trillion.
This isn’t just a spurious correlation, according to economist Brian Barnier, principal at ValueBridge Advisors and founder of FedDashboard.com. What’s more, he says previous bull runs in the market lasting several years can also be explained by single factors each time.
(Excerpt) Read more at finance.yahoo.com ...
The Fed hasn't added to their balance sheet since October 2014.
You can't just look at supply, you also have to look at demand.
If money is being created out of thin air, money which is not backed by any tangible assets,
If you're talking about money created by the Fed, they buy actual, guaranteed bonds when they create money.
My posts here on the markets are hereby vindicated.
Agreed.
It not about Trump per se. NO ONE can fix all that is wrong with our current financial system.
One might (and I stress might) be able to make it slightly less bad.
The market has been on herion for 8 years, once the FED stopped the flow the market has to correct, meaning stocks have to be price via markets not propped up up with FEDcash
What will happen if the Fed stops buying all the government bonds???
We are looking at trillion dollar annual deficits in the future as far as the eye can see. If the Fed doesn’t continue to buy huge amounts of that debt, what happens? What will be the impact in the financial markets worldwide?
And why did “candidate” Obama say that it was criminal and unAmerican and such, when we had $9 trillion in debt when he was first running for president? Yet he has nothing to say about how under his administration, we have added more to the national debt than all previous presidents combined????
They never bought all of them.
If the Fed doesn’t continue to buy huge amounts of that debt, what happens?
They stopped buying in October 2014.
Bank of Cards. Collapsing soon at a theater near you.
Got cash?
Got gold?
Got lead?
May I disagree?
Anyone who ends the vicious cycle of government pandering to special interests (green companies for example). And backs off on government regulations (EPA for example) and lowers taxes on business and develops policies that encourage more small businesses (open more fields for resource development, allow the keystone pipeline). And finally stimulate the repatriation of the money held off shore by our insane tax policy. \
All these things taken together (as part of Trump’s planning) will help overcome the effect of the FED policies. I believe being proactive is better than assuming the fetal position where the economy is concerned.
Add Donald to that list. It doesn’t matter who is in office, it will burst/crash or whatever name you want to pick.
The question is ...which one is best suited to help us recover? And that you already know the answer too.
None of these policies apply to the Donald as he is a Special Interest type of guy. Senator Cruz however IS the MAN to get this done
It is how they fleece us. They think we are their very own personal herd of sheep. Half of America acts like it.
Let me say for the record that you have no basis for your claim. I respect that this is a Cruz position, but it is false.
And I have a basis for mine (see donaldjtrump website.)
Prime rate at near zero, bond market at <2%, where does the money go?
Printing money for nothing and the K Street chic’s are free.
The Prime Rate is 3.5%. Don't confuse it with the Fed Funds rate.
Most investors already knew this, I am fully out of the market as of last Friday, great run up and I took my money off the table. All my trading buddies are getting the feeling that a big correction is due, and it won’t matter who is in charge. We are on the sidelines getting ready for the day after (a la, March 10 th, 2008).
The Prime Rate is 3.5%. Don’t confuse it with the Fed Funds rate.
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Thank you.
Trump has been talking about the bubble at his rallies. He has been saying, “Things are worse than you know.”
Yes, I think he gets it.
Actually they all probably do but are not willing to talk about it.
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