The profit-maximizing Big Tech / Big Media Totalitarian regime hasn’t just strangled free speech and civil liberties; it’s also strangled democracy.
The Fed continues to fund roughly 85% of new Treasury issuance. It affirmed at last week’s FOMC meeting that it won’t cut QE for the foreseeable future, and it will add, if needed. That means that if the Treasury needs to borrow more, the Fed will add more QE.
But it’s now apparent that the Treasury won’t borrow more for the foreseeable future. The new stimulus bill that we now know is about to pass will cost $900 billion. But the Treasury has $1.6 trillion in cash on hand.
This has huge implications for the stock and bond markets.
The story is that the new COVID19 strain discovered in the UK is la raison du jour.
The 5 day cycle projection is so far in the rear view mirror I can’t see it (3650). The 2-3 day cycle projection is 3590.
Monetary policy can be implemented through outright purchases or sales of securities, which permanently changes the size of the Federal Reserve’s System Open Market Account (SOMA) portfolio.
There’s much more to the story.
Oh boy, bears are not going to like this setup. It’s bad. Really bad.
The 10-12 month cycle continues to trend upward against its supposed cyclical down phase. What happens when the next up phase starts?
The Fed’s policy remains stable at about $170 billion per month in QE, give or take a few billion depending on the level of MBS replacements. The balance sheet is growing on trend. The stock market is tracking with it, as usual.
This will lead to a huge problem when the economy begins to react to enlarged stimulus.
This report discusses how to position trading strategy to take advantage.
In early rules-based versus discretionary central banking debates, it was long ago recognized that discretion came with the risk of one misstep leading invariably to a series of only greater policy mistakes. This is the story of the contemporary Federal Reserve
Extremes get more extreme until risk breaks out; then the reversal will be as extreme as the bubble expansion.
Here’s what’s scary about the hourly chart of the ES- the S&P fucutures. The 5 day cycle has been in a down phase since the Wednesday-Thursday overnight session. The December 9 high is cleared, and short term resistance seems set at 3717. If they go through that, this thing could go explosively higher.