This Is What 1,230 Days (And Counting) Of Explicit Market Support By The Federal Reserve Looks Like

Tyler Durden's picture

The day Lehman failed saw the launch of the most epic central bank intervention in history with the Fed guaranteeing and funding trillions worth of suddenly underwater capital. However, what Bernanke realized quickly, is that the "emergency, temporary" loans and backstops that made up the alphabet soup universe of rescue operations had one major flaw: they were "temporary" and "emergency", and as long as they remained it would be impossible to even attempt pretending that the economy was normalizing, and thus selling the illusion of recovery so needed for a "virtuous cycle" to reappear.

Which is why on November 25, 2008, Bernanke announced something that he had only hinted at for the first time three months prior at that year's Jackson Hole conference: a plan to monetize $100 billion in GSE obligations and some $500 billion in Agency MBS "over several quarters." This was the beginning of what is now known as Quantitative Easing: a program which as we have shown bypasses the traditional fractional reserve banking monetary mechanism, and instead provides commercial banks with risk-asset buying power in the form of infinitely fungible reserves.

This program has been so successful in its true intended goal - enriching its benefactors, the banks, who have managed to push the S&P to fresh five year highs (and the Russell 2000 to records) even as the economy has deteriorated to subpar growth not seen in years, in the process replacing a vibrant workforce with a part-time, gerontocratic labor pool, committing the US economy to many more years of subpar growth, that many more years of Fed interventions, a la QE, are assured (not to mention the need to monetize trillions more in US government deficits).

So how does all this look on paper?

We have compiled the data: of the 1519 total days since that fateful Tuesday in November 2008, the Fed has intervened in the stock market for a grand total of 1230 days, or a whopping 81% of the time!

Sadly, what the chart above shows, is that of the 51 months starting with November 2008 - the birthdate of the first QE, there have been a total of 9 (nine) months in which the market has been intervention free. Incidentally, the same months that have seen it plunge.

The same chart above presented in graph format courtesy of Stone McCarthy. The shaded areas show periods of explicit Fed intervention in the capital markets.

After looking at the chart above, if anyone still thinks there is a chance that US bond yields will "tumble" while everyone will continue to frontrun the Fed's ongoing purchases, which will continue into 2015 as there are at least $2 trillion in deficits in the next two years that have to be monetized by someone - the same someone who has bought some 90% of net non-ZIRP (5 years and lower maturity) issuance from the US Treasury, we have a bridge to sell to you.

As a reminder, this is the distribution of TSY holdings by the Fed ten years ago...

... And today:

For those who may have forgotten all the nuances and details of every Fed move in the past four and change years, here is a vivid reminder courtesy of SMRA:

LSAP Round 1 - QE1

The first large-scale asset purchase program -- so-called QE1 -- was signaled by Chairman Ben Bernanke's speech at the Jackson Hole Symposium at the end of August 2008. The FOMC chose to announce it during the intermeeting period on November 25, 2008. What was originally for $100 billion in GSE direct obligations and $500 billion in Agency MBS "over several quarters" evolved several times in the coming months. The FOMC first said it was ready to expand the quantity and duration of the program on January 28, 2009, and put that into effect at the March 18, 2009 FOMC meeting. This included buying up to $300 billion of longer-term US Treasurys over the next six months. The amounts of Agency and Agency MBS buys were upped in March to $1.25 trillion and $200 billion, respectively. Purchases of Treasurys ended in October 2009. Purchases of Agencys were reduced to $175 billion in November 2009, and the program wound to a close in March 2010.

The intent of the program was to augment the then-historic low in the fed funds target rate of 1.00% with unconventional monetary policy measures. The impact of the program was estimated to be equivalent to about 50-75 basis points in rate cuts. On December 8, 2008 the FOMC established the near-zero fed funds target rate range of 0%-0.25%.

LSAP Round 2 - QE2

The second large-scale asset purchase program -- dubbed QE2 -- was smaller than the first and was for Treasurys only, and underwent no changes in its duration. The FOMC announced purchases of about $600 billion in longer-term Treasurys on November 23, 2010, and lasted through the end of the second quarter 2011.

The additional accommodation was to address a period of too-low inflation.

Maturity Extension Program - Operation Twist

The Maturity Extension Program -- called "Operation Twist" because of its resemblance to the original "Operation Twist" in the early 1960's -- announced by the FOMC on September 21, 2011 involved about equal amounts in sales of shorter-term Treasurys from the Fed's portfolio and purchase of longer-term Treasuries. The total amount was for about $400 billion over a period through the end of the second quarter 2012, and was to increase the average maturity of the Fed's holdings of Treasurys to about 100 months. A continuation of the program was announced on June 20, 2012 to extend it through the end of 2012 with an additional $276 billion in sales of Treasurys of three years or less, and buying of Treasurys of 6-30 years in maturity. At his June 20 press briefing, Chairman Bernanke indicated that no further continuations of this program would take place.

The program was intended to support low interest rates and provide an incentive to move to riskier assets like stocks.

LSAP Round 3 - QE3

On September 13, 2012, the FOMC announced another round of asset purchases -- referred to as QE3. This time purchases were in Agency MBS and for open-ended buys of $40 billion a month.

The program was deemed necessary because the labor market simply was not improving fast enough to draw down unemployment at an acceptable rate. Chairman Bernanke and other FOMC participants voiced concerns in public remarks around the FOMC meeting that workers separated from the labor force were losing ground in terms of deterioration in skills and connection to the workplace, and that it was necessary for the Fed to act to fulfill its mandate for maximum sustainable employment and support growth.

The open-ended nature of the program had two advantages. It communicated to markets that the Fed would maintain its stimulus until the labor market improved substantially, and it would allow the central bank to taper off the program and avoid the immediate uptick in rates that has followed on the end of earlier calendar-based programs.

On December 12, 2012, the FOMC announced an expansion of the asset purchases with $45 billion for month in longer-term US Treasurys to replace the support of the expiring MEP program. With the new purchases of US Treasurys in a wider basket of maturities, the average maturity of the Fed's portfolio has begun to level off.

* * *

Hopefully the above should also explain why the retail investors is done:

Yes, it is the endless microfraud that is HFT scalping, churning and subpennying every order, or what little orders are left;

Yes, it is the still vivid memory of a 50% drop in the market when nobody, nobody, said it was possible;

Yes, it is the fact that the vast majority of what is left of America's Middle Class has no unlevered disposable income;

Yes, it is that as the baby boomers, who have concentrated the vast amounts of America's wealth start retiring the last thing they will care about is return on capital as opposed to return of capital,

Yes, it is the now glaring breakdown between deteriorating economic fundamentals, declining corporate revenues and now profits and the stock market...

... But most of all it is the now all too clear realization that a "market" that needs the Fed's explicit support 81% of the time in the past 1519 days (and counting) to prevent it from collapsing, is anything but a market.

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zorba THE GREEK's picture

I wonder how bad this would look without intervention.

venturen's picture

There would be less crooked investment bankers!

Careless Whisper's picture

@ zorba

You can stop wondering. Iceland: Criminal bankers in prison, Unemployment 5.7%, GDP +3%


economics9698's picture

Tick tock tick tock the clock is running, this shit will end badly.

GetZeeGold's picture



QE......we bring dead things to life.

nope-1004's picture

Fed may have been in the stock market 81% of the time, but they've been smashing PM's 100% of the time.  With monetary goosing like that, gold should be at $20,000/oz, shining a glaring light on Bernocchio's chrome dome.


fourchan's picture

100 years to buy america and enslave its people to perpetual debt, nice system you have there fed.

The Monkey's picture

The brillant thinkers at the Fed have distorted risk so severely that I don't know my head from my ass.  There is no way I would start a business, buy a house, do much of anything knowing the massive dollar carry trade that we have created.  It's a travesty and makes me think about just leaving the USA sometimes.  Instead of dealing with the conflict of interest, insider deals and corruption, it just goes on and on.

Bobbyrib's picture

Exactly. I feel the same way. Since not distorting the market would lead to its crash, I don't see the Fed not distorting the market either.

GetZeeGold's picture



No worries........the Fed has enacted the no fat finger policy. Just don't lay the keyboard down on the chair where some fatass could sit on it.

TruthInSunshine's picture

Remember one thing:  Ben Bernanke's entire legacy rests on his "virtuous circle" theory. It's nothing more complicated than that.

As a reminder, his "virtuous circle" theory is that as equity markets reflate, the accretive "wealth" it creates (even if history proves that such wealth is repeatedly decimated, typically at far faster speeds than it was "created," and is thus quite fleeting, artificial & illusory) props up confidence of those who see their portfolios rise, and thus fills them with the courage necessary to engage in more spending, especially of the discretionary type, which then somehow reduces the slack in labor markets by putting people back to work (even if much of that which is purchased is produced overseas).

This is his theory, as he has explained it time and time again, including during his interview on '60 Minutes' (where he essentially admitted that the Federal Reserve was acting to jig equity prices higher).

Just one of the many problems with his "virtuous circle" theory is that it depends inherently, no matter how rich (aka overvalued) equities are at any given time, that equities rise even further in valuation. There's literally no level at which equities are trading whereby Bernanke wouldn't attempt to drive them higher, directly and indirectly. This, my friends, is the textbook definition of blowing bubbles.

Another major problem with his "virtuous circle" theory is that equity "market" activity now consists of a historically low % of direct retail participation, and is concentrated predominantly within a relatively small group of hedge funds, TBTF financial entities (supported by near-free fiat shoveled their way by the Fed), and the "always there because they have to be" pensions and mutual funds. Additionally, given that Bernanke has suppressed rates to such artificially, manipulated low levels, corporations are also borrowing money on the cheap by floating bonds, and using the cash raised to engage in a historically high level of buybacks of their own shares of stock.

Thus, even by comparison with past, intentionally blown bubbles, such as the bubble, or the more recent housing bubble, there are far fewer participants receiving far lower (if any) benefits, of the temporary cheddar, and the stimulative effect on the overall economy is thus relatively benign, despite the fact that far more resources and tools have been devoted to this latest (and largest) bubble than the prior ones of recent history [in fact, it can be persuasively argued, and has been, that the tools, resources and other efforts implemented by Bernanke to re-flate the equity and other bubbles have had significant adverse impact on true, organic and productive real economic activity within the private sector].

The biggest problem with Bernanke's "virtuous circle" theory, however, is that while it requires radical, unprecedented interventionism within equity markets by what is supposed to be an independent central bank focused on monetary policy as a way of promoting its "dual mandate" (so clearly Bernanke is violating the Fed's charter as authorized by The Federal Reserve Act of 1913), there is and can never be any truly effective "put" or backstop put into place by that central bank, that will indefinitely suspend reality, and place a permanent "floor" (or create a permanent plateau, to recall the infamous language of an infamous economist during the early 1930s) underneath the equity market. As a result of this reality, there is a paradoxical correlation that mandates that the more that the central bank intervenes in equity markets, and that the more resources & monetary tools are used to promote its inflation, the larger the inevitable crash will be.

All's well that ends well and all's not well that doesn't.

Bernanke's biggest prayer/hope is that he's no longer in the hot seat when the massive bubbles (neat trick that, blowing simultaneous equity AND bond bubbles of historic proportions) he has now blown pop with a thunderous boom.

prains's picture


the size of your melon must be such that all hats need to be custom sized. never let your wife forget it.




TruthInSunshine's picture

I am genuinely elated that someone believes I'm somewhat intelligent.

I will only concede that I do tend to think more clearly after 3 or 4 decent pale ales or lagers (maybe that's why poets and writers are lushes).

prains's picture

you are an "economic artist", not sure there is a market for your skill but that is why beer was invented. 

A very fine Belgian ale by Ommegang is the trouble you seek. There is no finer woman in a bottle.

cocoablini's picture

I agree- the virtuous cycle is a theory loved by the monetarist cult. Or, as we know it, the ponzi mechanism. Based on faith and increasing monetary supply. If it acts like money or reserves it is Money. If Ben wants to pretend the garbage the FED is buying is money, then I guess it is within the corrupted fractional reserve system.

Remember, the #1 priority of the western governments and their overlords is to maintain the allusion that money has true value. Its a promissary system based on illusion and the longer this demise takes the longer the wealthy have to run for the higher ground and save their "wealth."

Its a shame after 4 years, we have blown the chance to screw bondholders and rebuild the transactional/savings system to integrity.

TruthInSunshine's picture

I have quite the ale, lager, pilsner, stout, porter, etc. collection.

We could drink our way around the world, on the house of course, while solving thought-planning resolutions to world economic problems.

prains's picture

I have quite the ale, lager, pilsner, stout, porter, etc. collection.

 there is no finer boat to sail.

but i hear the earth is flat...or on EPO, not sure which.

when the SHTF I hope you travel light and make your way north. Between you and me, the underground railway was more foreboding than most realize.




TruthInSunshine's picture



Here's to cheating, stealing, fighting, and drinking.
If you cheat, may you cheat death.
If you steal, may you steal a great woman's heart.
If you fight, may you fight for a brother.
And if you drink, may you drink with me

prains's picture


“We are small but we are many
We are many we are small
We were here before you rose
We will be here when you fall”


Bicycle Repairman's picture

This is the "money shot", I believe.  Thanks for making it clear.

Unprepared's picture

Apparently, according to some article referenced on ZH, the relative Icelandic success was notwithstanding the best politicians effort to keep the status quo and "thanks" to their incompetence.


Here wishing that Washington becomes as incompetent (in serving their own masters).

Supernova Born's picture

Only 9 months without Fed intervention since this monstrosity was conceived?

Sounds like they have mere days to act before Ben and "Rosemary's" baby is birthed.

shovelhead's picture

Simple Truthiness.

Someone will have to pay.

DoChenRollingBearing's picture

I am waiting on when the "Total" on the Fed's reported balance sheet reaches $3 trillion.  They are only $10 billion away now.  "Chump change"

I suspect that the Tyler's have an article or two ready for that day...

Tyler Durden's picture

It happened one month ago: the balance sheet is now over $3.1 trillion. However, due to the 2-3 month settlement for MBS purchases, it appears delayed on the Fed's books.

DoChenRollingBearing's picture

I am just an amateur and unconnected.  The figure that I use, consistently, is what I see in the back of Barron's each weekend, in the "Federal Reserve Data Bank".  OK, they have passed the $3 trillion...

But, please do write a piece once they have to fess up to the $3 trillion in public.  It will be harder for them to deny (or fudge or obfuscate) the number once it is out there, and moving from $2.990 trillion to $3 trillion is a milestone worth celebrating!

Big Slick's picture

"It's getting exciting now... Think of everything we've accomplished, man. Out these windows, we will view the collapse of financial history. One step closer to economic equilibrium."

Durden or Bernanke?

economics9698's picture

Assets are $2.965 trillion as per FRED.  Capital $54.7 million.  54-1?

If it's $3.1 then it's 57-1?

Does it really matter at this point?

prains's picture


Whenn you need an architect to build you a bitchin "wolfs lair" give me a call, you're soon to take over the world and you need a speer.

ReactionToClosedMinds's picture

good catch DoChen


Why do I speculate that January 2013 feels like late 2007 or early 2008?  No, the difference is that Humpty Dumpty had started to fall off the wall as early as late 2005, certainly 2006 ala sub-prime excess/fiasco/FannieMae/FreddieMc corruption et al.

It took alot of catalysts to set the stage for money markets to freeze in September 2008 post-Lehman/AIG.  So where is the vulnerability to serve as the torpedo ....?  Sovereign Debt?  A fiasco to be sure ....but Spain/Italy et al will have to descend into the inferno before that starts the panic.  PRChina finaly goes obvious in the Treasury trade?  Japan buckles?

Get my drift .. the risk (except when you look at VIX excluding long term VIX) is out there ....but where are the torpedoes?  Maybe Tepper is right .... be long equites but with liquidity in mind ......




The Monkey's picture

It's unfortunate that the topic is so esoteric that it takes literally dozens of hours to educate very intelligent people about what is going on at the Fed.  But I do my best, and they are always shocked.  I've spent way more time studying the Fed than I ever wanted to.  The institution is just a mess of groupthink insiders that have no remorse about feeding the banks and insiders at the expense of American citizens.

Keep it up Tyler.  You are leading the charge and it is catching on, slowly, bit by bit, two steps forward with one back.  There are actually some very good and kind people in the Fed that are sick of the BS, but they are no where close to the NY branch.

Some folks within the Fed appreciate the criticism.  Believe me.  There will be no change without constant, constant education about what has been and continues to go on at the NY Fed.

TruthInSunshine's picture

There are no innocent soldiers who follow orders they know to be wrong, immoral, unjust & violative of basic human decency.

With that said, it is true that the New York Branch of the Federal Reserve is a de facto separate and distinct entity apart from the other branches and districts within the Federal Reserve system.

The FRBNY is the toxic, malignant & poisonous epicenter and nucleus that harbors the true bagmen who do the bidding of the The Money Masters.

The Monkey's picture

The Fed gave us a few credible leaders.  The last one was Paul Volker.  Ben Bernanke and Alan Greenspan are simply bubble blowers protecting TBTF, regardless of conflict of interest, or past corrupt practices.

Rosengren and Yellen are there to carry out orders of the Executive office: blow bubbles and reelection stock market ramps.

Bobbyrib's picture

Right now the Fed is the economy. That is the reason to study it.

butchee's picture

And whatever happened to that 7.7 trillion that the FOIA found under the sofa cushions?

dwdollar's picture

I am waiting for the stock market to make all time highs while sentiment reaches all time lows.

Another dimension to this circus is that Bernanke was so concerned about inflating equities, he didn't pay attention to who was actually participating (and benefiting, if only for a fleeting moment in time).

El Oregonian's picture

Ya, and those criminal banksters ought to be just about ready to do a Fukushima on Iceland. Maybe a man-made massive volcano catastophe like a massive eruption like in 2010 at

Laser Shark's picture

Iceland Balance of Trade

United States Balance of Trade

You can't let the banks fail when you're a financial empire with a consumption economy.  We export US dollars.

SafelyGraze's picture

OT - you might have missed the press conference earlier tonight about the budget

it was brief

in fact, kinda zippy

q99x2's picture

This is the way the banksters take down the United States of America without firing a shot and only destroying the World Trade Buildings, a few thousand citizens, a few kids and the Oklahoma City Federal Building.

Well at least so far.

Whites and blacks are about to become the new Arabs.

chump666's picture

Let it roll you dumb ass central planning maniacs, let it roll...

Collapse of Communism


Totentänzerlied's picture

The USSR was about as communist as Antarctica.