The US FED Balance sheet fell from USD 4.444 trillion in Jan 2018 to a low of 3.76 Trillion USD end august 2019. In the same period, the total assets held by major central banks (Fed, ECB, BOJ and PBOC) remained constant.

Essentially Japan stepped up keeping the total assets held by the Big 4 Central Banks nearly constant. In the same time period, the S&P500 has basically remained the same – 1% higher. The tide now appears to be turning at least in the US with the balance sheet rising since September 01 2019. Here is the historic relationship between central banks’ total balance sheet (BOE i/o ECB, rest same) and the S&P500.

This doesn’t necessarily imply causality. https://lnkd.in/gJ–Hm8

If global central banks decide to drive their balance sheets up so as to counter an impending/feared slowdown, it is hard to see the S&P500 having a massive and sustained correction, at least if you believe that the above trend is solid. Interestingly both Powell (Fed Chairman) and Lagarde(ECB, post-Draghi) made speeches in the past month indicating more accommodative policies.