Federal Reserve

If QE really comes to an end, stock market bears do need to watch out, but I'm not sure it will end.

"The Federal Reserve’s latest asset purchase program, QE3, is coming to an end. What was once an $85 billion a month program, one in which at its peak had been goosing the financial markets and economy at an annual rate of $1.0 trillion – and over its 27 month life will have pumped $1.7 trillion of money into the economy – is going to zero. Given the outsized impact QE has had on the growth of U.S. money supply and thus the U.S. economy, we say investors take note, especially those furthest out on the risk curve, because what was once your primary tailwind could soon become your greatest headwind, maybe even a gale force."

But is it really going to end?

"Now you know why we call this current monetary cycle the Bernanke Risk-On Boom – Bust-to-Be! Unlike in past monetary cycles where money was largely injected into the real economy via bank asset purchases and loans, this inflation cycle is all about huge swathes of money being injected directly into the financial markets via Federal Reserve’s QE asset purchase programs. The banking system, at least to this point, has had a minor role." 

But will Yellen really end it? So Greenspan created the boom then quit, leaving Bernanke to deal with the bust. The Bernanke ignited the next boom then quit, leaving Yellen to deal with the bust. Talk about passing the buck.

The Fed absolutely manipulates the stock market.

"“They are definitely in the market-manipulation business, and nothing has changed,” said James Bianco, president of Bianco Research LLC in Chicago and a longtime student, and critic, of the Fed.
Called the “Greenspan/Bernanke put,” the Fed’s willingness to jump in when stocks fall dates back a quarter-century.
“The put option is back. If the market sells off enough, they will give us QE4,” Bianco told me."

At some point, printing money won't work, but I Yellen will probably keep printing until that point is reached.