SHOCK: STOCKS ’50% LOWER’ WITHOUT FED PUMPING…
Market Savior? Stocks Might Be 50% Lower Without Fed
By: John Melloy
Thursday, 12 Jul 2012
A report from the Federal Reserve Bank of New York suggests that the bulk of equity returns for more than a decade are due to actions by the US central bank.
Theoretically, the S&P 500 [.SPX 1353.08 18.32 (+1.37%) ] would be more than 50 percent lower—at the 600 level—if the bullish price action preceding Fed announcements was excluded, the study showed.
Posted on the New York Fed’s web site Wednesday, the study sought out to explain why equities receive such a high premium over less risky assets such as bonds.
What they found was that the Federal Reserve has had an outsized impact on equities relative to other asset classes.