How The Fed Quietly Bought 1,150 S&P Points

Tyler Durden's picture

With the need for exponentially larger expansions of the central bank balance sheets - and most importantly, the rate of expansion (flow) not just the size (stock) - we thought it useful to see just how the Fed's actions had impacted the S&P 500. From the lows in March 2009, 1150 S&P points have been 'created-or-saved' thanks to central bank largesse. That is a cost of $2 billion (not million!) for every S&P 500 point since the Fed started to expands its balance sheet by $2.3 trillion. Money-well-spent, we are sure you'll agree. In the meantime, it is the printing-endgames that we care about and the horrible sense of deja vu that the following chart inspires should at minimum see investors scaling back (which it appears the sensible retail investor is) - despite the imploring of every long-only asset manager.

The S&P 500 overlaid with the various Fed experiments...

And it seems like the balance sheets of the central banks need to expand at an ever-increasing rate just to stand still in terms of asset prices...

Does make one wonder what the 'real' value of the S&P 500 would have been without all that assistance?

But we are heading towards the end of Operation Twist and given the previous examples we have seen, it seems we are echoing once again...


Charts: Bloomberg

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
RacerX's picture

See, this is why we need QE3.

Dr. No's picture

But per the chart, we wont get it till a 150+ point drop in S&P

Sancho Ponzi's picture

'a cost of $2 million for every S&P 500 point '

That should read $2 billion per point

Badabing's picture

QE 1 527pts

QE2  2314pts

LTRO 317pts

1158 pts not 1150pts but who’s counting.

Can I have the extra $16,000,000

SheepDog-One's picture

Yea thats the story from all the 'experts', who seem to never call anything right and never see anything coming. I dont believe it at all myself, this line the 'QE3-4.New' is loaded in the breech and will be fired just as soon as we get around -150 point drop, then all back to normal again...I think its total horse shit.

I should be working's picture

Well we're almost halfway there, right? Give it two more weeks.

bdc63's picture

I'm gettin the shakes ... time to shoot up!  Anybody seen my dealer? -- don't cut me off now! 

Pladizow's picture

Is it that "traditional" bald guy with the gray beard?

ihedgemyhedges's picture

And down goes JP Morgan.........................

CURWAR2012's picture

If we see JPM go down, will silver rise?

Sudden Debt's picture

Strangely, 35 in the middle.
Now that jpm drops to 38.5 silver should go back to 32.
I keep them next each other on my ticker because it somehow feels like they're connected at 35.

bdc63's picture

wow -- this is going to be fun to watch ... down over 5% after market?!

G-d I love SKF!

jus_lite_reading's picture

Why is anyone surprised about this? Afterall, this is what a ponzi looks like!! 

Notice how "the markets" are itching for more ponzi fiat? They didn't crash back to earth yet because they KNOW Uncle BEnron will print more for them...


There are SO MANY variables that have gone wrong and BEnron knows that... in his initial calculation, it was not so complicated, but they forgot the power of the internet and a law of physics that says if you pull a flower in New York you move a whole planet out of orbit in another galaxy..

Buck Johnson's picture

Everytime they do this, the frequency and  the duration of the QE's get smaller and smaller.  Meaning that it's effect is less everytime on the market.

Rahm's picture

CTRL + P  in 3, 2, 1.....

mayhem_korner's picture



Correlation, muppetz!

Mugatu's picture

I smell blood!

lolmao500's picture


Well yeah. Since it's not your money. It's made up money. Then your friends on Wall Street can get rich and buy real assets with the profits... made up money giving the well placed people real assets... isn't it grand?

SheepDog-One's picture

1,150 S&P points just nothing but imaginary vapor, nothing at all backing it up except computer numbers. 

ArkansasAngie's picture

Benny will not print until it is absolutely demanded of him.  Then ... of course ... he will. 

Dr. No's picture

Ben's a simple guy.  He has his princeton formula which states print if inflation below target.  Stop if above.  The only break of the while loop is when Jamie calls and pulls the plug.

nobusiness's picture

Of course anything more than a 3% drop in the S&P is what defines "demanded of him"

bdc63's picture

Yep -- and then they cue Cramer to do another "HE KNOWS NOTHING!" rant, and voila!  It's like magic ... money from heaven ...

JustObserving's picture

Can the markets be more manipulated?  I suggest we replace the DOW with BEN to honor the Fed and give credit where credit is due.

Besides, it would be truth in advertising.

AldoHux_IV's picture

What would be the true value of our politicians' portfolio?

ShorTed's picture

I can't believe you're exercising critical thought here,  BTFD...



Bid out!

lolmao500's picture

In other news...

Taiwan monitors Chinese naval moves

Taiwan's President Ma sees popularity plummet (somehow he was reelected in mid-January (election fraud?))

Experts forecast imminent provocations by Kim Jong-un

Report: N. Korea executing people on cannibalism charges

N. Korea Could be Preparing for Follow-up Rocket Launch

China Wants It All

China is insisting that international agreements do not apply in its dispute with the Philippines over Scarborough Shoal. Chinese warships entering the Filipino exclusive economic zone (anything within 380 kilometers of land) are violating a 2002 agreement by nations bordering the South China Sea. Scarborough Shoal is 200 kilometers from the Philippines, and 850 kilometers from China. After signing the 2002 agreement China changed its mind three years ago and is now claiming ownership of the entire South China Sea.

Today, a Chinese military newspaper repeated the claim to Scarborough Shoal and warned that China would do whatever it takes to maintain its claim, no matter who (like the United States) backs the Philippines. That's pretty scary stuff coming from an official military publication.

SheepDog-One's picture

Yea the FED monetized the debt...Ive been saying that here for 2 years. 

Dr. No's picture

Well, not entirely true.  It wasnt all that quiet.  Between Ben's new press conferences and bailout's, there has been nothing secret about the pump.

mayhem_korner's picture



Not to us.  But walk down the street and quick-survey a dozen people and you will see the true meaning of "quiet."

Nobody For President's picture

Fed? What?

Ben? Who?

Are they gonna be on Dance With The Stars?

SheepDog-One's picture

The entire market and economy, if you can still even call them that, just made up entirely of congnitive dissonance at this point. Litteraly just a computer construct like the Matrix.

Boilermaker's picture

Better yet, what makes anyone think that they haven't been doing this shit during the 'great bull market'? 

They are just doing much more of it now.

 By the way, wonderful job banging the closing minutes to get the right color.  The headlines are already hitting on the 'snapping the losing streak'.  How pathetic can it actually get?

PeeramidIdeologies's picture

Yup, and now they are fighting the tide...

Angus195's picture

When Ben announces QE4 i'm long APPLE.....

mayhem_korner's picture



Yes. You and yer lightning-reflexes and Scott Trade account ought to beat those insider-informed algos to the table.

(BTW, Mr. Quick Draw, you might wanna practice getting OUT of positions in a hurry...)

The Swedish Chef's picture

Look at the above charts. Does "lightning-reflexes" strike you as necessary to make money in a QE environment? 


You know, being a smart ass(hole) isn´t required to post comments here.

mayhem_korner's picture



Mr. Chef you think anyone makes money from this scheme?  Do you think those QE-propped "gains" in equities improve your purchasing power?  If you do, you haven't been paying attention.

Unless you are the one controlling the info (and the algos), market-timing is a fool's errand...So when someone opens their jowls with some notion that "when the gun sounds, I'm going to make hay" - as if no one else on the planet is watching the same thing - I simply like to show them the mirror. 

If that causes you to get flush in the cheeks, well, it's Fight Club.  Bring a point or get back to cookin' up some vittles. 

q99x2's picture

Seems like the fuel is being watered down with each rise of the piston.

TooBearish's picture

In other news JPM has significant losses in CIO unit - whatever that means

Clint Liquor's picture

Money well spent

I'm sure your kid's grandchildren won't mind at all.

Badabing's picture

The Fed knows where to set the stops, how cool is that!