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.

The Fed’s BS (Balance Sheet) Returned To Normal Last Week, Sort of

The Fed’s liabilities settled down last week after a couple of weeks of wild fluctuations which resulted directly from the Fed encouraging banks to dress up their quarter end balance sheets with Fed RRPs. Now that those shenanigans are done until the end of December, a semblance of normalcy has returned to the balance sheet.

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.