As we head into the back half of November, this is what has people worried as we kickoff trading this week.
Increase In Fed’s Balance Sheet
November 18 (King World News) – Peter Boockvar: “I’m going to start the week by talking about the Fed’s balance sheet which has rocketed in size due to their purchases of T-bills. Whether it should be considered QE4 or not, in the eyes of the market it’s just semantics. Markets view any increase in the size of the Fed’s balance sheet as QE and the $250b increase in just two months is no doubt helping to lift stock prices. Now pre crisis the Fed’s balance sheet rose each and every year at about the pace of nominal GDP via open market purchases and currency in circulation but after the massive QE that has been brought to the world over the past 10 years, markets don’t differentiate.
Fed’s Balance Sheet Surges $250 Billion In 2 Months
Trying To Quell The Uprising
The Fed we know is trying to quell the uprising in the repo markets via open market purchases but they should also understand the default reaction on the part of the market in the post crisis era of central bank activism. Separately the rate cuts are still meant to generate higher inflation and to stabilize growth and to this I’ll quote Citi’s comments from last week which is something I’ve been saying for years now, “central banks’ inability to create inflation has caused them to underestimate the extent to which they are driving up asset prices. Yet this misunderstanding makes them all the more likely to carry on.”…
To listen to Doug Casey’s just-released KWN interview discussing his prediction of financial and economic chaos and a panic into gold CLICK HERE OR BELOW:
Fed Issues Warning Regarding Prolonged Low Interest Rates
On Friday the Fed released its financial stability report and we can be sure the advice given won’t be heeded as Jay Powell has already told us. When asked what the Fed will do in the next economic downturn he just repeated the conventional thinking of using zero rate policy and QE. The same policy that brought has no higher than 2% growth in the US and we saw what’s occurred in Japan and Europe after many years of trying. No outside the box thinking on the part of Jay Powell. In this report it said “If interest rates were to remain low for a prolonged period, the profitability of banks, insurers, and other financial intermediaries could come under stress and spur reach for yield behavior, thereby increasing the vulnerability of the financial sector to subsequent shocks.” Amen but will it be eventually heeded? Unlikely as stated.
***KWN has now released Gerald Celente’s powerful audio interview discussing what investors should do to prepare themselves for the coming depression, including what to expect from gold, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
Leeb Expect More Chaos And $25,000-$36,000 Gold
READ THIS NEXT! Leeb – Expect More Chaos And $25,000-$36,000 Gold CLICK HERE TO READ.
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