Fed-Fueled Stock Market Rally: A Bull Built on QE

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Jan. 17 (Bloomberg) -- In today's "Single Best Chart," Bloomberg's Scarlet Fu displays the correlation between the market rally and the boosting of the Federal Reserve’s balance sheet on Bloomberg Television's "Bloomberg Surveillance."

Balance sheet.

Basically, this chart shows the total assets on the balance sheet of the fed, the yellow line command of the s&p 500, the white line, a very close correlation in the past two years, basically moving in lockstep.

We are in the pitcher days of the old market right now.

With the fed starting to taper, the yellow line getting a little bit -- it will still move higher, but a little less steeply.

What happens to equity prices?

This is a raging theme right now as we go to doubles.

Mccain -- as we go to doubt most -- as we go to davos.

They say in the report that qe had an effect on bonds, has an effect on real estate and they both lee -- and they boldly stated that it does not have an effect on equities.

Did qe have an effect on the rise in equities and the lack of correction of equities?

I think there is no question about it, tom, that, by repressing interest rates, you not only -- and the process of buying bonds and keeping rates down, you not only helped bonds in the housing market, but you absolutely help stocks.

It is insane to think otherwise.

I got a terse note from cancer brandeis -- from catherine bandai's. -- kathryn brandeis and she disagrees with mckinsey.

What is the true price of stocks?

We don't know, do we?

We are going to find out.

We want to get the fed out of the market.

The sooner the better as far as i'm concerned so we can return to real normalized price discovery.

Will you stay invested as you await an uncertain outcome?

Absolutely, tom.

There are enough danger flags out there.

Friendly, ben bernanke will leave office to a standing ovation based upon his record and what he had to deal with.

But so did alan greenspan when he left office.

And ben bernanke's final chapter will be written for another few

This text has been automatically generated. It may not be 100% accurate.

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