This should have been a week for traders in the stock market to feel good about life. US stocks have rallied by close to 60 per cent in barely six months since they hit bottom in March. The Federal Reserve meanwhile pronounced this week that “economic activity has picked up” – the most confident language the central bank has used for some time.

But Crispin Odey, one of London's most respected hedge fund managers, was seeing things differently. He chose Wednesday, the day of the Fed's pronouncement, to ruminate, both in a note to clients and in the Financial Times, that the rally was “entering a bubble phase”. The word “bubble” is highly emotive but Mr Odey could justify it. He argued that markets were being distorted by governments' deliberate attempts to push down the price of money by buying bonds, a policy known as quantitative easing. “At some point the quantitative easing will have to come to an end,” he said, “but, until it does, this bull market is sponsored by [Her Majesty's Government] and everyone should enjoy it.”

The remarks struck a chord. Stocks endured a sharp sell-off after his words . The fear that the unprecedented supply of cheap money from governments is creating another bubble has been circulating in Wall Street and the City of London for months.