I have completed moving Wall Street Examiner to a new, faster server, with more memory and CPU. This will improve site performance and give you quicker access to all reports, both free, and Pro Trader proprietary reports. While I hope that this process is seamless, there may be disruptions to site access today. I and…
Before last week’s FOMC meeting, a few well connected banker talking heads started floating the rumor that the Fed would reverse course on tightening sooner than anyone currently expects.
Naturally, CNBC, the mouthpiece of the mob, ran with the story, breathlessly.
The Fed has a surprise in store that could mean an early end to interest rate hikes
— blared the headline on CNBC.com. The first three paragraphs of the story were epic breathlessness.
The Federal Reserve could have a surprise in store for investors this week, even if everyone already knows the central bank is raising interest rates.
Along with the quarter-point increase in the Fed’s benchmark short-term target, the policymaking Federal Open Market Committee is likely to announce another change that would signal an early exit from its history-making program to reduce the level of bonds being held on its balance sheet.
The mechanics are a little complicated. Yet it suggests that what once appeared to be an operation to shrink the amount of bonds the Fed owns that would have run well into the next decade could be wrapped up next year, or early 2020 at the latest.
Now, I’ve been tracking and reporting on the Fed ever since 2002, around the time the Fed began publishing reams of data about its operations on the internet every day. Analyzing liquidity, particularly central bank liquidity and its effects on markets, is the nexus of my research and analysis, along with technical analysis.
The post This Secret Code Tells You That The “Smart Money” Is In Trouble appeared first on Lee Adler’s Sure Money.
Tax collections fell in May thanks to the Trump Tax Cut. The budget defecate widened on that and massive spending increase under the Trump-Congress BBA (Budget Busting Agreement). Here’s what that means for the markets.
Short term cycle projections have been hit, but intermediate cycles suggest more downside. Here’s what to expect now.
The market stalled at a trendline cluster at 2780-90 last week. Here’s what that means for the outlook.
So you think you want to be a liquidity analyst? Here’s a list of links to get you started.
H 41 – Weekly Fed Balance Sheet By tracking this over time you can see the growth or shrinkage of the Fed balance sheet. This is virtually in real time, published 1 day after the close of the weekly statement period.
H8 Weekly US Commercial Banking System Balance Sheet There’s a wealth of data here on the condition of a slew of banking system indicators. It’s published 9 days after the close of the weekly statement period, so it’s timely. Again, by tracking over time, you can see the liquidity flows.
Despite our little mistake with time zone differentials, the ECB did what we warned you it would. It announced a cut in its QE purchases, and a target date for ending them altogether.
I have been telling you since January when the ECB cut its purchases from €60 billion to €30 billion, about the scuttlebutt that the ECB would end its purchase program in September. Well, they won’t end it in September, but they’ll cut to €15 billion per month in purchases, with a target date of year end for ending those purchases altogether.
The post Urgent Crash Bulletin After Today’s ECB Announcement appeared first on Lee Adler’s Sure Money.
The stock market keeps rallying. Has Rule Number One – Don’t fight the Fed – been repealed?
The answer is no. But there are many sources of liquidity. The Fed is the most important, but there are other contributors. And investor liquidity preferences can and do often shift between classes of assets, like stocks, bonds, and commodities.
There’s no longer sufficient liquidity in the US market system to allow for concurrent bull markets, and there is less and less liquidity all the time.
But there’s still enough for one market to rally at the expense of another. When dealers, and big institutions liquidate bonds, they’ve been buying stocks, and that has kept the pot boiling for a little longer than I thought it would. So stocks have headed for the obligatory test of the highs before turning down for the “big one.”
The Fed isn’t the only central bank in the world of course, and its two big partners in crime, the BoJ and ECB are still printing money. With the Fed pulling money out of the system in increasing amounts, we need to keep an eye on the big money printers in the rest of the world. They may hold the key to when US stocks begin to decline in earnest. Europeans in particular are big investors in US assets. So when the ECB prints money, some of that money instantly finds its way into the US.
There have been rumors for months that the ECB will end its QE purchases soon. They’re expected to announce cuts in their rate of purchases this Thursday – in their press conference following the Governing Council meeting. That will happen at 2:30pm CET, which is 9:30am EST for those of you who are not overseas. The conference will be live streamed right here at this link.
The end of QE in Europe could be enough to turn a flattening liquidity picture in the US to outright shrinkage. The liquidity graph of the combined assets of the Fed, ECB, and BoJ has already turned flat. A turn to the negative would be devastating for financial asset prices.
The post Watch This Tomorrow at 9:30 A.M. – And Then Prepare for A Breakdown appeared first on Lee Adler’s Sure Money.
Macroliquidity is flattening as the Fed withdraws money from the banking system and extinguishes it. That means that there is less and less money available to absorb new securities issuance, particularly US Treasuries. Bonds have been pummeled. But sellers of bonds used the liquidity generated by US commercial bank and foreign central bank buying to…
A key intermediate cycle in gold has turned up. But it faces headwinds from longer cycles. Here are signs to look for that the metal will finally break out.