Macro Liquidity Pro Trader

Analysis of the major forces of macro liquidity that drive markets. Click here to subscribe. Subscribers, click the post headline to access reports.

Fed Minutes Are A Waste of Time

I will no longer comment on the bulk of the FOMC minutes. They focus on the Fed staff’s and FOMC members’ views of the economy and the markets. Why bother with that? The Fed makes policy on an ad hoc basis based on whatever happened in the markets in the weeks immediately prior to the meeting. Forward guidance is therefore meaningless and so analyzing the propaganda about the Fed’s decision process is a waste of time.

The Cases of The Disappearing Fed Funds Market and the Reappeared Half Trillion

This is an excerpt of a Pro Trader Weekly Macroliquidity service update. Macroliquidity Pro Trader weekly subscribers (or Professional Edition), click here to download complete report in pdf format. The Fed’s liabilities fluctuated wildly last week while total assets were little changed. The wild changes in liabilities were a direct result of the Fed actually supporting,…

We Have Come To Bury Debt, Not To Praise It

The Fed’s balance sheet went through the normal mid month fluctuations last week as MBS are paid down early in the month and then are replenished at mid month. There has been essentially no change in the total size of the balance sheet since QE officially ended a year ago. And there will be no material change going forward until the Fed either decides to start shedding assets (not gonna do it) or until it restarts QE (somewhat more probable than shrinking the balance sheet).

When Central Banker Economic Delusions Become Everyone Else’s Living Nightmare

The Composite Liquidity Indicator has been inching sideways after hitting a new high during the August 26 week. More importantly, the slope of the line has been nearly flat since January. In this game, if liquidity isn’t growing, that’s tight. Governments are always borrowing more, so if the system isn’t providing new cash to absorb that debt, the cash to pay for the new debt needs to come from somewhere else. That spells liquidation.

Accounting For The Fed’s Liabilities As Fed Funds Market Disappears

Fed Liabilities Week Ended September 16

Where else can we review the weekly balance sheet changes of a major corporation, bank, or other financial institution weekly? The Fed provides the means for us to look at its balance sheet every week and actually follow the flows of funds as they move from the Fed to the Federal Government to the banks and vice versa.

Fed Policy Resusbstantiation Rally May Be Preempted

Fed and US Treasury injections of extra cash into the market via Fed MBS purchase settlements and temporary Treasury debt paydowns often tend to coincide with FOMC meetings.  We have seen this phenomenon so much that it would appear to be deliberate. Most of the time it results in a 2-3 day rally immediately on the heels of the FOMC announcement.

US Bank Deposits Have Soared While Europe’s Sank Since ECB Started QE

The Fed’s balance sheet was little changed last week as there were no MBS paydowns, nor purchase settlements. There were no term deposits offered and RRPs outstanding were little changed. Meanwhile, there’s no sign of deleveraging in the US banking system as loan growth continually exceeds 7%. Money supply grows apace. But in Europe, QE…

What You Must Know About Fed Minutes And Emanations From Jackson’s Hole

Composite Liquidity Indicator

This post is an excerpt from the Pro Trader and Monthly Investor MacroLiquidity report. Subscriber links are below the text. The FOMC meeting minutes are a key instrument of official Fed propaganda. They show how the Fed wants you to view policy. There’s some useful information there, but it’s not what the Fed says it…