Is QE4 Underway? One Veteran Banking Analyst Says 'Yes'

Veteran banking analyst Dick Bove of Odeon Capital believes "Quantitative Easing 4" is well underway. Bove said the Federal Reserve is pouring new money into the economy and thereby boosting stock prices.

Bove said he has a very simple theory related to the growth in stock prices:

• There are a number of shares in the equity markets; and
• A number of dollars available to buy those shares.

"When dollar growth outpaces the growth in shares, the value of shares goes up," Bove commented. "When share growth increases faster than the available dollars share values go down. Presently, the Federal Reserve is aggressively increasing the number of dollars available. The assets of the Federal Reserve are up approximately 10.3% in the past three months – an annualized rate exceeding 40%."

The analyst highlights that M2 which had been growing at 3.2% year-over-year in late 2018, is now growing at 7.6% year-over-year.

"This is fueling the market rally and it does not look like it is about to ease up soon," he said.

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