‘Mystical Assertions’ And ‘Many Pretty Pictures’: Is The QT Fascination Misguided?

‘Mystical Assertions’ And ‘Many Pretty Pictures’: Is The QT Fascination Misguided?

Market participants' obsession with Fed balance sheet runoff kicked into high gear late last year and was, by many accounts, one the most pernicious aggravating factors when it comes to explaining the Q4 swoon across risk assets. That's amusing for at least two reasons. First, for all the derisive commentary about how runoff ended up not being akin to "watching paint dry", it actually was "like watching paint dry" right up until everybody decided to use runoff as an excuse to sell everything.
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One thought on “‘Mystical Assertions’ And ‘Many Pretty Pictures’: Is The QT Fascination Misguided?

  1. Reducing Fed balance sheet from a bloated 4.3 Trillion was essentially a promise advertised by the System to the American Public that in fact rationality can prevail in spite of the apparent evidence to the contrary. The promise was voided because the Equity markets negated the spirit and intent of this agreement. The public is responding saying in effect “we don’t believe you anymore” .This is a vote of no confidence.
    The result is we travel along on momentum until a loss of critical velocity drops this projectile back to the earth. No amount of words can change this fact…in spite of Herculean attempts to the contrary.

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