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.
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. Here’s today’s pump job.
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