Federal Reserve Goosing

Here's a little different perspective on the recent stock market uptrend, by Mike Whitney:

We keep hearing that "The worst is behind us", but the spin doesn't square
with the facts. Sure the stock market has done well, but scratch the surface and
you'll find that things are not as what they seem. Zero hedge--which is quickly
becoming the "go-to" market-update spot on the Internet--recently posted an
eye-popping chart which traces the Fed's monetization programs (Quantitative
Easing) with the 6-month surge in the S&P 500. The $917 billion increase in
securities held outright equals the Fed's $1 trillion increase to its balance
sheet. In other words, the liquidity from the Fed is following the exact same
trajectory as stocks, a sure sign that the market is being manipulated.

Surprisingly, traders seem to know that the Fed is goosing the market
and have just shrugged it off as "business as usual". Go figure? Perhaps it pays
to take a philosophical approach to market rigging. Who needs the gray hair
anyway? The result, however, has been that short-sellers (traders betting the
market will go down) who have placed their bets according to (weak)
fundamentals, have gotten clobbered. They appear to be the last holdouts who
still place their faith in the unimpaired operation of the free market. (Right)
Here's how former hedge fund manager Andy Kessler sums it up in a recent Wall
Street Journal article, "The Bernanke Market":

"By buying U.S. Treasuries and mortgages to increase the monetary base
by $1 trillion, Fed Chairman Ben Bernanke didn't put money directly into the
stock market but he didn't have to. With nowhere else to go, except maybe
commodities, inflows into the stock market have been on a tear. Stock and bond
funds saw net inflows of close to $150 billion since January. The dollars he
cranked out didn't go into the hard economy, but instead into tradable assets.
In other words, Ben Bernanke has been the market."