McKinsey "Finds" QE Did Not "Boost Equity Markets"

Tyler Durden's picture

Earlier today consulting company McKinsey, which has now become the new Moody's, released a 72 page report titled "QE and ultra-low interest rates: Distributional effects and risks" which contains the following pearls of wisdom: "The impact of ultra-low rate monetary policies on financial asset prices is ambiguous. We found little conclusive evidence that ultra-low interest rates have boosted equity markets. Although announcements about changes to ultra-low rate policies do spark short-term market movements in equity prices, these movements do not persist in the long term." Uhh, does McKinsey have an S&P chart that goes back to 2008? One would think whoever commissioned this report can at least pay for "bigger charts." Continuing: "Moreover, there is little evidence of a large-scale shift into equities as part of a search for yield. Price-earnings ratios and price-book ratios in stock markets are no higher than long-term averages."

We will spare any analysis, in-depth or otherwise, of the report: it merits none, and certainly not for those who watch the farce that the "market" has become.

Sadly, by issuing such drivel McKinsey has just tarnished what little reputation and credibility it may have had.

Instead we will just point out, visually, what McKinsey is saying: namely that the chart below from SocGen titled very confusingly "Liquidity has been the main driver of US equities since 2008" which shows the causation between the S&P and the Fed's balance sheet, doesn't exist and is purely a figment of overactive realists' imaginations.

Oh, and to the skeptics, we urge both you - and McMoody's - to speak to the US Treasury and the TBAC, which three months ago "finally admitted the truth: It's All POMO." To wit:

There, hidden on page 26, or slide 76 of 100, where the Treasury discusses "The Impact Of Monetary Policy", the biggest "conspiracy theory" of all becomes merely the latest conspiracy fact. First, for corporate bonds...


But just as importantly, for stocks.


But most importantly, and tying it all together, POMO. Only this time, finally, the US Treasury finally admits it.


So, thanks to the US Treasury, we know that between January 2009 and April 2013, on days in which the Fed POMO was more than $5 billion, the stock market rose a total of 570 points, on days in which the POMO was less than $5 billion, the cumulative stock market gain was "only" 141 points, and when there was no POMO, the S&P gained... -51 points.

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VD's picture

McKinsey integrity ambiguous; more at none.

Mister Ponzi's picture

Did they hire Mark Zandi?

BoNeSxxx's picture

McKinsey has become as irrelevant as John McCain.

Just a bunch of relics in their final death throws... they (all) just need to go drool on themselves somewhere out of sight.

Ying-Yang's picture

Reminds me what Jules Winnfield said in Pulp Fiction:

"And I will strike down upon thee with great vengeance and furious anger those who would attempt to poison and destroy My brothers. And you will know My name is the Lord when I lay My vengeance upon thee."

Man... get busy God

Bearwagon's picture

By the way: It was the prophet Ezekiel who said that first.  ;-)

Four chan's picture

McKinsey, sir you are an idiot.

Herd Redirection Committee's picture

Don't confuse complicity with stupidity.

Dr. Engali's picture

Hah...Yellen just through McKinsey's 72 page repeort out the window when she stated QE supports stock prices.

viahj's picture

but the Bible tells me that those were the words of God, spoken to Ezekiel...

Bearwagon's picture

You are right. That is why it starts with the words: "Thus says the Lord God [...]." But it is Ezekiel who tells us.

Flakmeister's picture

Never bring up logic when discussing the Bible....

t0mmyBerg's picture

it reminds me of a childrens book we read to our kids whose main characters are a dinosaur and a boy named reginald who insists that dinosaurs are extinct therefore the dinosaur character cannot possibly exist, despite the fact that she is obviously standiing right there.  umm yeah

yogibear's picture

Mark Zandi will fix all stats and make them look bullish.

TimTom's picture

Nah, more like clueless. They should stick to the meaningless consultant buzzwords and leave real analysis to the grownups.

max2205's picture

They work for the powers that be


Look at the momos move this morning....breakout or top shorting?

Eireann go Brach's picture

Obama= If you like your 401k balance you can keep it!

mrdenis's picture

If you like your gold can keep them it is written so it shall be done ...

ziggy59's picture

More Jedi Knight economics...

Nobody For President's picture

These are not the statistics you are looking for...

Bro of the Sorrowful Figure's picture

Bro of the Sorrowful Figure finds unprotected sex does not lead to STDs or babies, aggressive beer consumption improves driving skills, and gravity bongs do not lead to tasty waves.

who? mckinsey? those guys are fahgs!

XAU XAG's picture

And to think he gets more pay than those that serve a Big Mac

soopy's picture

What's an Equity Market?

Sudden Debt's picture

It's where you bring the sheep, take their money and ship them to the slaughterhouse... and than there happens some stuff and you get lasagna.

Sudden Debt's picture


RSDallas's picture

This company should be shut down.  Amazing!

PaperBear's picture

The fact that the two things correlate doesn’t matter one little bit.

Cassandra Syndrome's picture

Yeah sure just like the way price goes up and quantity demanded go down is a correlation.... Or the supply of money to an asset class increases and the price increases is a correlation....

Hedgetard55's picture

You are reasoning with a box of rocks.

Dr. Engali's picture

You are giving the paperbear a little bit too much credit.

Snoopy the Economist's picture

PaperBear: Nows a good time to say you forgot the sarc tag...

SheepDog-One's picture

More correctly, and definitely more sad, is that equity markets are now just a reflection of hand-holding central bankster policy....completely illegal and unimaginable 20 years ago.

Nobody For President's picture

But 20 years ago Sheepdog, banks were still mostly banks, not cranking out financial weapons of mass destruction and front-running the market every morning.

SheepDog-One's picture

All planned, 2008 was just the fear and panic event to fearmonger everyone into accepting the FED's plans to completely take over markets.

timbo_em's picture

Is there an #AskMcKinsey later today? This report raises some questions!

holdbuysell's picture

Ask away!

From the paper:

"We welcome your feedback on this discussion paper. Please send your
comments to"


Seasmoke's picture

And yet strangely , Gold continues to go down this year. 

Dr. Engali's picture

Wow, I have heard some ridiculous claims in this business, but this one has to take the cake. Even the most out of tune broker "investor" is aware of the fact that the Bernank and his printing press is elevating this market.

I have two questions for McIdiots:

1) Why is the best market performance on POMO days?

2) If the Bernank isn't elevating this market why is wallstreet so afraid of him turning off the presses?

Racer's picture

If you don't look you won't find

Hedgetard55's picture

What is that expression again? "It is difficult to see something when your paycheck depends on not seeing it".

Bearwagon's picture

"It is difficult to get a man to understand something, when his salary depends on his not understanding it."
Upton Sinclair

orangegeek's picture

The "white paper world" strikes again.


Step one:  enact an idea that supports your agenda (makes you money)

Step two:  go to the universities/consulting companies and pay them to create a report that supports your agenda

Step three:  spread the results amongst the lamestream media

Step four:  pay for some advertising in the lamestream media so they are bribed well enough to write about your bullshit

Step five:  sit back and watch the lemmings lap up your garbage and make your bank account much bigger

Step six:  lather rinse repeat

Flakmeister's picture

Smoking does not cause cancer and global warming is a hoax...

Clowns on Acid's picture

your illegitimate logic is nauseating you feckin idjit....

Flakmeister's picture


You clearly have a very different dictionary than the rest of us....


Edit: Anyone else want to give it a try? 

Herd Redirection Committee's picture

Let me just ask, Flak, who said 'global warming' is a hoax?  Are you talking shit about critics of the theory of AGW again??? (anthropogenic global warming, stating, not only is the globe's temperature increasing, but as a direct and sole result of human activities)

You should really start by learning your opponent's position, instead of this straw man bullshit.

Flakmeister's picture

Given the title of this article, "... QE did not boost Equity Markets", I thought I would use the rhetorical device of making two equally absurd statements....

By the way you commited a strawman fallacy, proponents of AGW do not claim the warming is the sole result of our activities...

Oh, but I do know the positions of the "skeptics", learning them made my head hurt mightily....

For example, once you have seen one cherry pick of the data you have seen them all...