The Fed *is* the market. 💸 
More chart crimes! The Fed *is* the market part deux:
I've had a few claim that these charts are inaccurate due to scale variance. While there's truth to the statement, the charts aren't meant to be 1:1. QEternity gives commercials the capacity to scale up leverage in markets. Many seem to have missed this because of 2D thinking.
The reality is that central bank liquidity flows provide the juice that risk assets need for upward price revisions. If that wasn't true, why is there a correlation that spans over a decade between central bank balance sheet size (QE) and risk asset pricing?
For those who remain unconvinced, I would suggest spending some time researching this topic at length. Monetary policy's transmission mechanism is directly in to financial markets. That is one reason why economic growth (ie employment/wages) vs market pricing are hard to compare.
On the other side of that, when QE is reduced, we see markets shudder, often seeing periods of intensifying volatility until the punch bowl is returned. Perhaps as revealing is that no advanced country's central bank has fully normalized QE policies. Ever.
The reason for all of this is the world is hooked on ever cheapening debt. A 40+ year debt supercycle with lower and lower rates and more abundant debts. Every liquidity stick save by central banks thusly requires an increasingly outsize response to stabilize credit markets.
In summary:
QE++ == market++;
QE-- == market--.
QE++ == market++;
QE-- == market--.
The best part of FinTwit is how many blocks you can earn when people don't bother to think outside of the box. 🤣
Or being called a "joke" because people can't understand the larger message, and when it is explained they retort with personal attacks.
The joke is on them if they aren't able to think critically! 😂😂
The joke is on them if they aren't able to think critically! 😂😂
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