Wall Street media shills have noted that the Fed’s balance sheet has shrunken a bit in recent weeks. Let’s get this out of the way first. Follow the money. Find the profits!Liquidity is money. Regardless of where in the world that money originates, eventually it flows to and through Wall Street. So if you want…

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The Meyer Lansky like Fed has cut back QE, but Treasury supply has also receded. So the Fed is still funding most new issuance, either by direct purchase of Treasuries, or indirect funding via purchases of MBS. That has allowed the dealers enough flexibility to keep the players at the gaming tables. Are they being…

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As the Fed has cut back on QE, Primary Dealers have also cut back their inventories of Treasuries and the leverage that they use to finance them. That’s not bullish. Here are the details and a few charts along with a suggested strategy to play the dealers’ game, not the one they want you to play as they set up new traders for the kill.

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The imbalance between Fed QE and Treasury supply is ugly as as it gets for the next week, but then it gets less ugly. Here’s what you need to know and how you need to see it to trade successfully.

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We know that total liquidity is still growing. The Fed is still printing and pumping money into the system at an historic rate. That rate is well above the norms of the original QE back in 2009-10, but well below the peak panic levels of March and April. The Fed has been dialing it back from the extreme pumping it reached at the market bottom in March.

Ay, but theres’s a rub, and it’s not barbecue. It’s an irritant. And the markets won’t like it.

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Primary dealers have been gradually paying down their outstanding repo loans from the Fed, just as we have long expected. This has momentous implications for the stock and bond markets. You need to see these charts! 

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The Fed has now promised QE infinity. But will it be enough, in the face of Federal deficit financing to infinity and beyond? Because for every dollar the Fed has promised to print and pump through Primary Dealer accounts into the financial markets, the US government has promised to issue about $3 in new debt.…

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US Commercial Bank data had been sending warning signals that all was not well for at least a year before the stock market crashed. I chronicled that in these reports.

The warning signals came to fruition in February and March.

But then the Fed stepped into the breach and went crazy. What the Fed did, and is still doing, went beyond “unprecedented.” It was nuts.

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The line items of the Fed’s Pandemic Panic Emergency Programs get a lot of media and analyst attention these days. What a waste of time and energy. Let me explain why.

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We’ve watched this bizarre scene unfold where the Fed is gradually reducing QE, the Treasury keeps pounding the market with new supply and stock prices keep rising. Here’s how they did it, and what changes ahead will force a change in the outlook.

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