"I read this on 2 twitters from Jon Markman, who publishes financial newsletters such as Strategic Advantage. Maybe you have some more detailed emails/ reports that would confirm this, in which case your thoughts would be interesting. And would you keep your hedge on the S&P500 David?

"Bank of Japan balance sheet is up massive $275B in 3 weeks: equivalent of the Fed's balance sheet rising $1 trillion. It's buying stocks

"Fed balance sheet is only +$350B since start of QE2, at +$16B/week. To get to $600B by July, it needs to ramp up to $19B/week for 13 wks"

David Fuller's view Thank you for this interesting email, certain to be of interest to many subscribers.

We definitely know that there has been plenty of liquidity in the global financial system recently, a point discussed here and in the daily Audios. The evidence has been all around us in the form of rallying stock markets and firm commodity prices.

Regarding the two reports mentioned I have not seen specific numbers regarding the BoJ's monetary infusion but I have assumed that it is massive, as it should be given the circumstances. The Fed's QE2 stimulus has been incremental, as one would also expect.

In trying to assess likely policy decisions, I try not to forecast what I would like central bankers to do. Instead, I find it more helpful to imagine what I might do if I was in their shoes and had a similar background to the individuals considered.

I have struggled to do this with the BoJ's Masaaki Shirakawa. I know less about him and there are also cultural differences. However, we all know considerably more about Ben Bernanke, thanks to his papers, many interviews or speeches, and detailed press coverage. Given all the second guessing and criticisms from so many financial and media pundits, if I were Mr Bernanke, I would try to conclude QE2 with a flourish, which is what the numbers quoted above suggest.

Just as importantly, if there is a growing consensus as to how Mr Bernanke will end QE2, this is also important given the power of sentiment in the markets. Remember, in the short term the market is a voting machine. If people who invest in the US stock market believe that Mr Bernanke still favours higher equity prices - and I see no reason why he would not as it contributes to the 'feel good factor' which he has attempted to revive with some success - some of those investors will join the party.

Incidentally, what I describe in the paragraph above also defines the risk with my hedge short in the S&P 500 Index (weekly & daily), which I opened last Thursday and Friday. Yes, the trend is temporarily overextended and susceptible to some mean reversion towards the MA. Yes, the Advisor Sentiment readings posted yesterday are in amber flashing light territory. Yes, the rising price of crude oil is a headwind. However, bullish liquidity and sentiment is a powerful combination. It will be interesting to see how this plays out.