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The One Chart The Proves How The Fed Singlehandedly Doubled The Stock Market Since 1997
Back in 2012, we reported that in a stunning research report released by none other than the New York Fed itself, "since 1994, more than 80 percent of the equity premium on U.S. stocks has been earned over the twenty-four hours preceding scheduled Federal Open Market Committee (FOMC) announcements (which occur only eight times a year)—a phenomenon we call the pre-FOMC announcement 'drift.'"
In other words, stripping away philosophical debates over the nature of money, whether QE is monetization of debt, whether the NY Fed trading desk intervenes in markets (via Citadel or alone), there was quantitative proof demonstrating that on days immediately surrounding FOMC announcements, the S&P 500 enjoyed a statistical surge far greater than on all other days.
Today we update this stunning finding courtesy of data from Stifel which lays bare all hollow rhetoric of a "secular bull market", as one which has been driven from the very beginning by the Fed itself. In fact, without the indirect boost of FOMC meetings, the S&P today be at the same level it was 20 years ago!
From Stifel's Barry Bannister
Talk of a “secular bull market” should not dismiss the way in which Fed policy helped “create” higher stock prices since the 1990s. There is a ~1,000 point gap between the actual S&P 500 since mid-1997 (red line) and the S&P 500 excluding price changes that occurred the “day of plus day before” every Fed meeting (147 meetings, so 294 days) since mid-1997. The blue line is flat, like past Secular Bear Markets.
And for the fans of statistics, here is the bottom line math:
By excluding 294 "day of + day before" Fed meeting trading days (147 x 2 days excluded) out of over 4,500 total trading days since Jun-1997, the drop is ~50%. Basically, excluding just 6% of Fed-influenced days cuts the S&P 500 price in half.
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The Market Whisperers, nothing more than financial druids peddling faith & hope to the true believers. Nothing against real druids...
The simple fact remains.... the stock market had yielded a higher return vs fixed income on a trading basis... this still remains the case.. when rates do rise, perhaps market will not "collapse" straight away, but perhaps will see continued implosion of volumes and increasingly sidways price action.. when the Corp buybacks become NON-economical = the end of multiple expansion...
US Rate Hikes *Will* Hurt Emerging MarketsThat's a fairly compelling trading strategy right there.
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Please make it stop. Dow can't break free of 17760
Why not skip the math and call it all rigged ...
3:30 ramp, but bonds ain't buying it.
You should write for ZH!
None dare call it a conspiracy, bc if you do, your hedge fund's positions will be attacked (a la Einhorn).
free market and all...
what's the difference with a communist regime anyway?
Free market = dog-eat-dog.
Communist regime: other way around.
Long shorts.
And I don't mean these.
He still doesn't understand why he always got beaten up at school :)
ZH'ers and readers who've been around the block, please help me with one question?
Is life really getting worse every day? Do you find it hard to love your country anymore?
Or does it just seem that way because I'm getting older and I pay attention to things like the US having a NATO partner that is a terrorist regime (Turkey) invading Iraq, shooting down Russia's planes, and the economy on edge of collapose?
Life has become very depressing and I hope that this is just normal and it's because I am paying attention now that I'm in my 40's and feeling less invincible?
Some days, no most days have become a struggle, and things become so bad that I wonder if it's even worth keeping my job, the amount I make now, it doesn't seem worth the effort - I think of getting together with family and living like the old days on the farm.
Thanks for reading, and your feedback. I know this website isn't the place to go for uplifting information, but I feel the info is useful, honestly I cannot stand to ignore the world anymore.
Is anyone else here, or just me?
Farm, definately.
If you can afford the farm, do it. I have worked with plants all my life, and this stockmarket thing is a distracting hobby :) A hobby which allowed me to buy a small garden centre afterI made money from Nasdaq in 1999/2000. Even if you have a shitty day markets wise, going outside and working makes it all seem irrelevant.... Get on with it! :)
'Become a farmer'... Shit I have morphed in to Jim Rogers....
Thank you both, you both confirm what my heart is telling me. I have had success trading as well, it's a hobby / addiction but has treated me well. The day job is miserable, sixty hours a week in a cubicle will drive you mad especially when forced to work near all this information.
Speculation hurts people, farming feeds them.
You owe.
Bring on the dv's.
I am still trying to figure out how to start my Goat farm/Cheesemaking operation in the mountains somewhere out west...Unfortunately unless my VXX bet hits big time I simply do not have the cash....
Work with plants, any at all. Then you will https://www.youtube.com/watch?v=1f-cylGETUU , despite your age. This I know.
Maybe it gives it all back for Christmas 2015 ...
C'mon Santa!!!
Comply & Obey you stupid sheeple. STFU & work. Someone needs your money / debt. Honor THEE one party Oligarchs!