This Is The S&P With And Without QE

Tyler Durden's picture

For a while there, it seemed that even the densest of career economists who try to pass for stock pundits on financial comedy TV, were starting to get that without the Fed's (and the ECB's, and the BOE's, and the BOJ's) QE, the market would be much, much lower (whether 500 points lower as Gundlach suggested or much more, remains unclear). After all: by now it should have been clear to most that QE is doing nothing for the economy, and everything for the stock and bond market (here we certainly agree: there is a bond bubble, which by implication there is an even more massive stock bubble too - anyone who says the two are unlinked can be immediately put on mute).

This is why we presented this chart previously:

And is also why in January, we showed this update of the calendar days with and without QE:


And yet, judging by the roster of TV guests appearing on assorted cable stations, the confusion is back again.

So just to set the record straight, and make it so easy even Jeremy Siegel gets it, below is a chart showing the absolute performance of the S&P, starting with March 18, 2009 when full-blown QE1 was announced, and adding up all the S&P points "gained" under some QE regime: QE1 (2009-2010), QE2 (2010-2011), Operation Twist, QE3 and QE4 (2011 until today) on one hand, while subtracting all the S&P points "lost" when there was no QE or no advance notification of QE from the Fed, such as the period from the end of QE1 (March 31, 2010) until the QE2 announcement at Jackson Hole in August 2010, and from the end of QE2 on June 30, 2011 until the start of Operation Twist on September 21, 2011.

The chart below is sufficiently self-explanatory that not even career economists will need assistance to grasp it.

One final point: for all those who say the Fed's QE has "been successful", or the stock market is sufficiently strong and does not need any more forced liquidity injections, here is a simple suggestion: just end it.


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Meat Hammer's picture

If the Tylers weren't on a drone-strike list before.........

knukles's picture

But that means Krugman won't understand it.

Meat Hammer's picture

True.  Or he'll say it's our fault the S&P isn't 1,700 because we're hoarding gold and not buying STAWKS.

knukles's picture

Yes, per the syllogistic logic exemplified by the iKrug, I submit the following.  If the Hoarding of Gold by the Private Sector Diminishes Economic Activity, the the Hoarding of Even More Gold by the Government ... That which he said should be confiscated from private hands... Will Diminish Economic Activity Even Further ...

If one believes in Original Sin, then Krugman and His Ilk are Our Punishment.

Precious's picture

You didn't pump that.

McMolotov's picture

This shit's driving me nuts. All this waiting for the end to come, and it just seems to go on and on and on and on.

And on and on and on and on...

Pump up the Valium.

Precious's picture

This is about as useful as a coin toss booth at a fucking street carnival.

ParkAveFlasher's picture

I'm no TA chartist but from what I've seen of Elliott Waves, the QE gravy is gettin' awfully wavy.

McMolotov's picture

Fonz posted a link earlier today:

According to that ridiculous douche Wesbury, QE has no effect on the stock market. None. Stocks are up because of "rising profits due to new technology," and they're super cheap right now. Never been a better time to buy!

I wonder if Tyler was rebutting that fucktard.

SafelyGraze's picture


good thing there's QE!


s&p 500


Supernova Born's picture

More than half of Medicare dollars are spent on patients who die within two months.

The Fed is going to top that fail.


kaiserhoff's picture

No need to end it, Tyler.

Just ease up on the accelerator a skosh... and..., oh my fucking god.


Fish Gone Bad's picture

OK everybody, time for a big group hug.  Now isn't that better?

Honestly, it is not going to end anytime soon.  For all those short, I am sorry.  For all those long, I am sorry as well.

ShankyS's picture

While the above chart is technically correct it should be wrong, cause the "promise" of QE came at Jackson Hole in 2010 and thus you are not counting about 150 SPX points that I believe should be in the figures above. They ran on the "promise of QE for a little over two months before it was actually announced. 

InvestmentMind's picture

Feel free to send Brian a copy of this.

I did.


Parrotile's picture

Stawks super cheap? Not if you look at p/e they're not.

Betting on 'em going higer?  With your money (and a machine-driven "Market"), maybe you do need "Medical Assistance"

Beting on 'em going to the Moon, but with "Corporate" (i.e. Bank Depositors) money? - if it goes well, just pocket the profits. If it goes badly - it ain't your money at risk after all.

Relly helps being in the "In-Crowd" doesn't it . . . . . . .

imbrbing's picture

and on and on and on and on and on and on and on and on and on..........

Doubleguns's picture

Put a dinosaur head on that chart and call it the Bernakasauris Rex.

Meat Hammer's picture

Tyler recently posted a blog from 2 years ago.  I read the comments......there were lots of "won't be long now"s.  

This shit can go on for a long time.

fonzannoon's picture

My comments are littered with "won't be long now"

I went back and found a funny exchange with Kito. It was before he lost his turkey sandwich bet. He told me gold was absolutely going down because they would never, ever do QE3. I told him gold was absolutely going up precisely because they would do QE3.

Kito ended up being right about gold and wrong about QE and I ended up being right about QE and wrong about gold. The best part is I capitulated right before QE3 and said they probably would not do it after all.  How I have any sanity left is beyond me.

gmrpeabody's picture

Oh..., so you think you're sane?


Hulk's picture

Yes it can go on a long time, but it won't be long now !!!

HardAssets's picture

A century (at least) of bad karma has built up. When this muther crashes it'll be unimaginable and breath taking. For the youngsters who were still in diapers at the time, do some research on the 1980s market crash and the kind of one day losses there were. With all the computer algos and hidden derivative counterparty risks out there . . . look out below. I've got insurance in phys PMs, but also trade the market to get some kinda return. I cross my fingers and hold my breath, and know analysis is of minimal value with rigged markets. But looking at the chart for the S&P, you wonder just how long the crooks can keep this thing going.

The pace of overseas war diversions and internal police state actons will give clues as to how bad things are getting. TPTB need to push forward with their preparations, but with as little alarm being sounded by the sheeple as possible. Since Americans have seemed to be massively dumbed down by public 'schooling', t.v., and mindless, childish activity - this is easier to do today than with previous generations.  When they no longer seem to care what we think . . . really look out.  

Fox-Scully's picture

Didn't you ever see the Never Ending Story?

Chupacabra-322's picture

@ McMolotov,

By the way, nice handle.

The Illusion and Deception by The Global Criminal Cabal Oligarch Bankster Intelligence Crime Syndicate will continue for as long as the Criminals want to.  Reason being, they own the keys to the printing press. 

“The illusion of freedom will continue as long as it's profitable to continue the illusion. At the point where the illusion becomes too expensive to maintain, they will just take down the scenery, they will pull back the curtains, they will move the tables and chairs out of the way and you will see the brick wall at the back of the theater.”
? Frank Zappa
Ranger4564's picture

In my opinion, they're priming the pump, inflating the balloon, take whatever analogy you prefer, but basically, they're building up the anticipation to the point where people begin to see the incredulity, and at that point, their aim has been achieved... panic the people... then crash the system, people will be witless, they can foist any program / doctrine... so it is soon... there is too much talk about the market is too high, about taking profits, about safe havens... the time is coming. I think.

dtwn's picture

No shit.  This AK-74 and 3000 rds of 5.45X39 aren't going to get put to good use if the S don't HTF soon.  Not that I want to have to........but I will admit to having somewhat of a post-apocalyptic fantasy after reading The Stand, The Postman, and seeing Red Dawn waaaaayyyyy back in the day.

Edit: AK-74 sold at a gun show.  Or was it lost in that kayak accident?  Shit, gots to stop drinking to every Krugman column.

Keynesian Mess's picture

Krugputz is listening; see all of those single down votes?

toys for tits's picture

The Fed has chained us all to the Titanic to 'rescue' us from our individual life preservers.

max2205's picture

Trade what the market is not what you want it to be.....

Ranger4564's picture

What do you suggest, long locks and chains, short life preservers, neutral on titanic?

FinalCollapse's picture

They cannot end it. There is no exit strategy that ends nicely. The moment they (Fed+Stonecutters) end it the whole Ponzi will collapse like a house of cards.

Goldilocks's picture

Homer the Great - the simpsons full episode 2013 Part 26 (15:02)

Urban Redneck's picture

Government bonds are a demand for future money (printing) from the government.

The future transition to the now.

azzhatter's picture

Yup, if everything is fine then just end it. you fucking fuck Bernanke.

bania's picture

"One final point: for all those who say the Fed's QE has "been successful", or the stock market is sufficiently strong and does not need any more forced liquidity injections, here is a simple suggestion: just end it."


Exactly. No better argument.

yogibear's picture

They can't The banks and pension funds would collaspe. The US government would have to severly cut speding.

Instead of them collasping the people will.

Pay the price now or pay it later.


Fish Gone Bad's picture

Why end it ever?  The banks ala the Fed will own all those "worthless" MBS and will then own a great deal of the US.  The hot money out of the US is making the world more destabilized which is good for weapons producers, which is also good for banks. 

Honestly, there has never been a better time to be old...

Debt-Is-Not-Money's picture

"Honestly, there has never been a better time to be old..."

In two weeks I turn 71. I admit that this thought of yours has been rattling around in my head for some time now (unfortunatly I'm in good health /sarc).

Once the banks "own" all of the MBS's they should be nationalized, the debt cancelled, and the banksters hanged (high).

Helix6's picture

Re: "Instead of them collasping the people will."

Ya, that's kinda the whole idea, isn't it?

BC6's picture

Fuck you Ben Shalom Bernanke!

McMolotov's picture

"A day may come when the magic of QE fails, when we forsake the printer and cleanse all markets of bullshit — but it is not this day!"

—Bernankagorn, son of Bernankathorn

yogibear's picture

Yes, it will be ineffective some day. Looks like that is getting closer each day.

Sudden Debt's picture

I wonder what will happen to the economy when they change the name of QE...

Temporalist's picture

"Amplitutde Settling"

"Aggregative Restoration"

"Sumative Serenity"

"Restorative Subsidising"


The sheeple are tired of hearing the oldspeak terminology.

Precious's picture

The United Queates of America.