The financial talking heads on every financial propaganda main stream media cannot remind you enough how we are hitting all times high, and they act as if it is an amazing phenomena and no one can explain. Well, let me help all these gurus out.
I am going to make this short and sweet. Take a look at the FED balance sheet, in particular the QE, but not QE, the chairman Powell has initiated under some fancy name, REPO. The balance sheet went from $3,761 trillion on September 4th to $4,030 trillion on Nov 11th. That is a bit over 7% increase.
Let us take a look at what happened to the market during that time. The S&P was 2937 on September 4th and on Nov 11th was 3087, that is an increase of a bit over 5%. So you see, the diminishing return of the liquidity is already evident. And the recent run up is not something mysterious at all.
But what bother me is that you do not hear a mention of such logic on the financial propaganda channels. All you hear how well the economy is doing and that is why we have to keep on pumping money in it.