In case you still thought stock prices were advancing on improving economic growth, take a gander at this puppy. The grey line is the Fed’s securities holdings. You know – all the Treasuries (and MBS) the Fed is buying from Wall Street with freshly printed money. The black line is the S&P 500. Quite a correlation wouldn’t you say? The question that savvy investors should be asking themselves is, “What happens when the Fed stops buying bonds in June?” It could be an unpleasant summer for the unprepared.
The following two tabs change content below.
Jeremy Jones, CFA is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Jeremy is a contributing editor of youngresearch.com.