This is what it looks like when profits trump people:
I imagine that this is the recipe by which capitalism might ultimately kill itself.
Chart from Zero Hedge.
Pretty much says it all, doesn’t it? They had another one (NYSE total market cap = 5 times fed balance sheet) which was equally damning.
Here’s the link… this chart is a thing of beauty…
Wow, thanks for posting that, Steve. The chart with QE stripped out of the S&P is indeed astonishing. I guess the question that will be determined with time is whether is it valid or invalid to “strip out” the effects of QE when trying gauge future prices. I tend to side with those who believe that if/when “flow” stops, there will be insufficient buying power to support current prices. But I suppose only time will tell…
Maybe the way to look at it is thusly: prior to 2007 when credit markets froze there was one relationship between the Fed balance sheet and demand for risky assets. After the sub-prime implosion a huge segment of ‘AAA’ assets vanished into thin air, no longer eligible as collateral – hence the massive drop to a ‘new normal’ of Fed balance sheet leverage.
Maybe the point is that a wide range of investors / institutions had access to marginable collateral and leverage prior to the sub-prime freeze. Afterwards everything goes through the primary dealers and the Fed?
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