Large and In Charge

"You can walk out of here...or be carried out. But have no illusions, we are in charge."
--Hans Gruber (Die Hard)

The relationship between central bank monetization programs and stock market prices cannot be overstated.

Note the blue shaded 2016-2018 period. The Fed's balance sheet was flat while the SPX legged higher. Correlation breakdown?

Not quite. As noted on the graph, this it the period when monetization programs at other central banks kicked into overdrive. ECB, BOJ, and others initiated QE programs that made the Fed's look like child's play. The graph above captures the global central bank leg a bit better.

But now the Fed is back. Large and in charge.