$7 Trillion And Signs Of Addiction.
The Fed's balance sheet topped $7 trillion in the latest update, a milestone that is all at once impressive and somewhat dubious.
Even if you didn't know anything about the crisis that's decimated the global economy, leaving tens of millions jobless and hundreds of thousands dead, you'd be able to discern that something was wrong simply by eye-balling the chart.
Pretend you've been asleep for the past three months, and last you heard, the Fed was still just buying a token amount for "reserve m
I suppose the Fed will keep on pumping. And the more it does, the more the markets will be separated from economic reality. Mere money cannot stop a virus anymore then shining a flashlight up one’s ass or a bleach injection.
is this a new type of jubilee? Necessary, unclear if sufficient, yet with unknown unintended consequences. I would feel calmer if this was a movie rather than our cumulative lives / livelihoods.
While there is uncertainty and there are bound to be unintended consequences – the addiction that Heisenberg alludes to is a fait accompli – from the Fed’s actions in the short to medium term the situation is quite straightforward: markets are headed higher.
Of course, there is a possibility that rising tension between the United States and China may escalate into a grinding, non-military, conflict – a cold war, if you will – that presents a new black swan event for nascent markets.
And the Fed relentlessly signals to all these Hopium addicts that they are not sure of their control of the situation –every Fed official from the Chair on down has been liberally sprinkling their bromides with the word “uncertainity” in various and sundry forms –and in contrast to “risk”, “uncertainty can neither be measured nor managed.
My wife at dinner last night:
“A friend my age just retired. But he’s been at Apple for decades so he must have more money than God.”
Me: “But does he have more money than Jerome Powell?”
My wife, non-plussed: “I guess Fed humor isn’t my cup of tea.”
two points!
Let’s hear some more from the peanut gallery. It’s a long weekend.
Another big bankruptcy (Hertz). Interesting to see if this changes the funds flow.
There will be lots more, how can all these businesses with tight margins,(restaurants, retailers, etc) survive now with 50% less customers? I went out the other day and its a whole new strange experience, and not enjoyable.
Instead of sauntering around shopping, usually buying stuff I don’t need, now I have to wait in line to get in, carefully find what I “need”, and get the hell out, to avoid germs and let some other poor shopper in. Can’t see it working ……
Taper Tantrum 2.0. 5 trillion of issuance. Fed can monetize 70%. Who is going to buy the remaining 1.35 trillion?