This is the most important question as we head into 2020.

How Will It Ever Exit?
December 17 (King World News) – Peter Boockvar:  
Foreign selling of US notes and bonds continued in October by a net $16.7 billion. This brings the year to date selling to $99 billion with much driven by liquidations from the Chinese and Japanese. It was back in 2011 and 2012 when in each year foreigners bought over $400 billion worth. Thus, it is domestically where we are now financing our ever increasing budget deficits. The Fed now has also become a big part of the monetization process via its purchases of T-bills which also drives banks into buying notes. The Fed’s balance sheet is now $335 billion higher than it was in September at $4.095 Trillion.

Fed Balance Sheet Ballooning Because Of (Not) QE4
How Will It Ever Exit?

Again, however the Fed wants to define what it’s doing, market participants view this as QE4 with all the asset price inflation that comes along with QE programs. It will be real interesting to see what happens in 2020 to the repo market when the Fed tries to end its injections and how markets respond when its balance sheet stops increasing in size. It’s so easy to get involved and so difficult to leave.

Note Of Caution
The Fed And Yearend, Plus A Note Of Caution From A Guru  CLICK HERE TO READ.

***To listen to Adrian Day’s powerful KWN audio interview discussing the gold and silver markets and much more CLICK HERE OR ON THE IMAGE BELOW.

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