Since 2008, excessive quantitative easing tools were used, and implicitly reserve balances with federal reserve banks have ballooned in aggregate to over US$% TRN for the FED in, conveniently targeting to inflate equity prices in the process. As soon as these stimulus programs came to an end 6 weeks ago, so too did the rise in stocks. The recent equity market weakness can be linked directly to the decline in liquidity now that the Fed has entered a tightening cycle.
020316 CGI Market Commentary What happens when the FED withdraws Liquidity