- The Federal Reserve has been pumping billions into the financial system after the mid-September tumult in very short-term lending markets known as repo.
- As the central bank’s balance sheet has expanded, the S&P 500 has grown at almost the exact pace.
- Some on Wall Street worry that the market is back to depending on the Fed’s monetary juice, rather than fundamentals, as the path to gains.
Financial markets have seen this story before: The Federal Reserve rides in with piles of freshly minted digitized money that helps send the prices of stocks and other assets lurching forward.
But this isn’t 2009.
Instead, it’s 2019, and once again the central bank, whether by intention or coincidence, has seen its efforts to keep the financial system running smoothly end up as a bonanza for Wall Street, where the decadelong bull market has taken another leg higher in step with a Fed liquidity effort.