The Fed’s balance sheet and US banking indicators remain in the calm before the storm.
Or to borrow another cliché, we’re waiting for the other shoes to drop. There are two of them. One will be when the Fed commences actual balance sheet reductions. The other will be when Congress raises the debt limit. Those two events will signal the end of the bull market.
That doesn’t mean that the market will instantly crash. It’s not how bear markets begin. The process takes time, usually many months.
Here are the indicators we’re watching on the Fed’s balance sheet and US banking system that will tell us when the sheet will hit the fan.
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