How Has Fed Intervention Impacted Markets?

April 11, 2012 11:00am by Barry Ritholtz

click for larger graphic

Terrific chart from Doug Short looks at the impact of the Fed on markets:

We’re well into our sixth month since the latest Federal Reserve intervention, Operation Twist, was officially announced on September 21. We’ve now seen several bouts of aggressive Fed attempts to manage the economy following the collapse of the two Bear Stearns hedge funds in mid-2007 about three month before the all-time high in the S&P 500 . . .

If a picture is worth a thousand words, this chart needs little additional explanation — except perhaps for those who are puzzled by the Jackson Hole callout. The reference is to Chairman Bernanke’s speech at the Fed’s 2010 annual symposium in Jackson Hole, Wyoming. Bernanke strongly hinted about the forthcoming Federal Reserve intervention that was subsequently initi

Good stuff. The two-fold question is: 1) When do the fundamentals trump Fed liquidity? 2) What will the Fed do in response to a falling market?

Source:
Fed Intervention and the Market: New Update
Doug Short
DShort, April 10, 2012
http://advisorperspectives.com/dshort/commentaries/Fed-Intervention-Update.php

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