May be? How about definitely, along with improved expectations for economic growth.
(Bloomberg) — The Federal Reserve says that its Treasury-bill buying program isn’t the same as quantitative easing. But the advance in U.S. equity prices alongside the central bank’s growing balance sheet suggests to some that the effects may not be wildly different.
The central bank, driven by the need to tamp down problems in funding markets with liquidity injections, has expanded its balance sheet from as little as $3.76 trillion at the end of August to $4.05 trillion. That growth has, in effect, already reversed close to 40% of the shrinkage that the Fed began in late 2017. The S&P 500 Index, meanwhile, has climbed more than 7% since the end of August and this week reached new record highs.
To calm funding markets and improve its control over short-term interest rates, the Fed has used measures including the implementation of repurchase-agreement operations and a $60 billion per month program to acquire T-bills. Officials argue that the T-bill buying isn’t QE because, unlike several of the central bank’s previous asset-purchase programs and reductions to its benchmark rate, it isn’t aimed at lowering long-term borrowing costs and affecting the economy.
Peter Boockvar, chief investment officer at Bleakley Financial Group, says that in the eyes of the market this is just semantics.
“Markets view any increase in the size of the Fed’s balance sheet as QE,” he wrote in a note to clients on Monday.
Stocks, have of course, also been buoyed by other factors, ranging from an improving outlook for global growth and the prospects of a U.S. China-trade deal to better-than-expected earnings and the Fed’s three quarter-point rate cuts this year. But previous QE episodes were certainly instrumental in helping to fuel the post-crisis rally in equities, and signs of history repeating could well be adding to market buoyancy.
Of course, continued robust consumer consumption is helping.
But California Democrat Eric Swalwell insists on saying “Everything is NOT beautiful.”
Did Eric Swalwell just out himself as Adam Schiff’s whistle blower in the Trump investigation??
