sp'daily5
VIX'daily3
Summary
US equities opened a little choppy, leaning on the weaker side.
Meanwhile....
Its always 'curious' to see the 1929 crash highlighted, not least by a world leader.
The afternoon saw further equity chop, leaning on the weaker side. Volatility picked up, (if only fractionally), with the VIX settling +1.0% at 13.68.
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Within the Twilight Zone
We have been living within the twilight zone for many years, with today seeing the start of QE4.
SPX, monthly'8
Today saw the Fed create around $7bn of new money out of nowhere, and use it to buy US T-bonds from the primary dealers. Some of that institutional money in bonds, will now make its way into equities, or a few lesser areas (commodities, VC, even forex).
QE4 will initially run at $60bn a month, which makes for an annualised $720bn.
See 'Treasury securities' schedule
The gross irony is that Powell is very clear in stating 'This is not QE'. Instead, he deems it 'Reserve management purchases'.
Lets be clear...
A reduction in the balance sheet = Quantitative Tightening (QT)
An increase in the balance sheet = Quantitative Easing (QE)
The balance sheet is now rapidly increasing once more.
Anyone who doesn't call it QE4 is either just plain lying, in denial, or 'in bed with the fed', as most of the financial media appear. Ohh, and you can be sure the $60bn number will be increased, probably by the early spring.
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There have been many intros to the show, but this is perhaps the finest...
Yours... 80s child
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| Early evening in the London metropolis |
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| The Twilight Zone |
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Goodnight from London
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