Menu Close

Month: August 2020

Status Quo Antisellem

The Fed’s balance sheet resumed its growth in August after a bit of a stall in July when dealers paid off Fed repos. That program has been at zero since then. Dealers don’t need to borrow from the Fed when the Fed is cashing them out every week with QE.

And there’s the rub for bears. There’s still enough QE to keep this farce going, short term factors notwithstanding.

Last week was MBS settlement week (see last week’s QE update). That pumped $100 billion into dealer accounts. Not all of that showed up on the Fed’s balance sheet total assets because other assets were paid down in the. MBS get paid off in the normal course of business during the month. Some of the Fed’s superfluous alphabet soup programs have also had reductions.

But that stuff doesn’t really matter to the stock and bond markets.

Our focus is on the Fed’s securities holdings, in what’s called the System Open Market Account (SOMA). That’s where the action shows up. It’s the money that the Fed pumps into the financial markets through its straw men, the Primary Dealers. And that is still steadily growing.

Here’s what that means for the outlook and strategy.

Subscribers, click here to download the report

Not a subscriber yet?

Get this report and access to all past and future reports risk free for 90 days! 

Stock Market Rides the Razor’s Edge

The longer intermediate cycles say that the market is heading much higher. Shorter cycles point to more limited upside.  But the whole shebang is fragile as hell. Here’s what to look for, along with some interesting chart picks on both the long and short side.

Technical Trader subscribers, click here to download the report.

Not a subscriber? Try Lee Adler’s Technical Trader risk free for 90 days!  

Gargantuan Deficits Will Shrink, But It’s Not Good News

By now, you’ve heard all about the $2.8 trillion budget deficit so far this year.

Old news. With more pandemic spending on hold, the monthly deficits will shrink. Good news, bad news. Here’s why.

Subscribers, click here to download the report.

KNOW WHAT’S HAPPENING NOW, before the Street does, read Lee Adler’s Liquidity Trader risk free for 90 days!

Act on real-time reality!