from Zero Hedge
Things are starting to get surprisingly heated at the Fed, now that not only Wall Street strategists, and traders but also Fed presidents are starting to tell the truth about how the Fed’s “NOT QE”, which sorry but we will call it by its real name QE 4, is pushing stocks to ridiculous nosebleed record levels (as one can see by the relentless meltup in the S&P over the past four months), at valuations that are now higher the dot com days.
It all started when, in a moment of bizarre honesty, Dallas Fed president and former Goldmanite Robert Kaplan admitted in a Bloomberg interview that the expansion of its balance sheet was helping to lift asset prices. Commenting on the Fed’s massive liquidity response to the JPMorgan-precipitated repo-market crisis (it’s not just our view that Jamie Dimon caused the repo crisis), which triggered not only the first Fed use of repos since the financial crisis, but also $60 billion in monthly T-Bill QE, Kaplan said that “my own view is it’s having some effect on risk assets”, adding that “It’s a derivative of QE when we buy bills and we inject more liquidity; it affects risk assets. This is why I say growth in the balance sheet is not free. There is a cost to it.“