Produced by Ben Marino. Filmed by Greg Bobillot. Graphics by Joanna Kao
If you want to understand the bizarre decade that markets have experienced since the financial crisis. I don't think you can do bette. When you look at the S&P 500, the main index for US stocks compared to the expansion in the Fed's balance sheet, assets bought, bonds are trying to push down their yields, and so push up the valuations that people will put on stocks.
They have been phenomenally successful. Since the S&P hit rock bottom in March 2009. It's more than tripled, and as you can see, that rally over that period has been remarkably in tune with the Fed's bond buying. You see a big hiatus during 2011, when they weren't buying any. Similarly seen, stocks hit a plateau once the Feds' buying programme was finally over in 2015.
The big question for the future-- stocks look very expensive by any measure other than when you compare them to bonds, in which case they look cheap. What will happen to the US stock market once the Fed, as it must, starts to reduce its balance sheet?