QE and the flow of free money has been the life-blood of this market since 2009. That basic equation has not changed in my view. Sure, the Fed has stopped buying bonds, and has been raising interest rates, albeit begrudgingly, since 2016. But the prospect of a significant reversal of QE that continues to drain the liquidity swamp, so to speak, is what has rattled this market most of all, as it raises the specter of another Fed mistake that pops yet another asset bubble.
Anything that stems the tide of what the Fed and others fantasize about as a return to interest rate normalization is viewed positively by stocks. After getting quite oversold in late December, it was dovish comments and the admission by Fed Chair Powell that the Fed would be less aggressive on rates going forward that got the market going again.
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