Anonymous ID: 113806 Feb. 5, 2019, 8:19 a.m. No.5037239   🗄️.is 🔗kun

Stop Worrying About the Fed’s Balance Sheet

It’s not the threat that people seem to think it is.

 

Financial types have long had a preoccupation: What will the Federal Reserve do with all the fixed income securities it purchased to help the U.S. economy recover from the last recession? The Fed’s efforts to shrink its holdings have been blamed for various ills, including December’s stock-market swoon. And any new nuance of policy — such as last week’s statement on “balance sheet normalization” — is seen as a really big deal.

 

I’m amazed and baffled by this. It gets much more attention than it deserves.

 

Let’s start with the stock market. Yes, it’s true that stock prices declined at a time when the Fed was allowing its holdings of Treasury and mortgage-backed securities to run off at a rate of up to $50 billion a month. But the balance sheet contraction had been underway for more than a year, without any modifications or mid-course corrections. Thus, this should have been fully discounted.

 

Moreover, if anything, the run-off of the Fed’s balance sheet had a smaller-than-expected impact on the yields of those securities. Longer-term Treasury yields remained low, and the spread between them and the yields on agency mortgage-backed securities didn’t change much. It’s hard to see how the normalization of the Fed’s balance sheet tightened financial conditions in a way that would have weighed significantly on stock prices.

 

Better explanations for this fall’s weakness in the equity market abound. For one, economic growth and corporate profits looked set to falter in 2019, as the effects of corporate tax cuts waned and the labor market tightened. Demand for scarce labor should increase its share of income, crimping profits. And if the economy didn’t slow enough on its own, the Fed was likely to raise interest rates to make sure that happened. These developments weren’t good for an equity market that had been accustomed to strong earnings growth and an accommodative central bank.

 

Why then, one might ask, did the Fed announce changes to its plans to pare down its holdings of Treasury and mortgage-backed securities? Actually, there wasn’t much of a change at all. Here’s what Chairman Jay Powell said at his news conference last week:

 

The Fed will maintain a balance sheet big enough to satisfy banks’ demand for reserves, with a buffer above that so the Fed will not have to intervene in the money markets on a day-to-day basis;

The Fed now expects banks to demand more reserves than previously thought, so its balance sheet will likely be larger — this means more securities in its portfolio;

The Fed could use its balance sheet more actively as a monetary policy tool but only if interest-rate adjustments — its primary tool — were to prove inadequate.

 

None of this should be a surprise. It always was likely that the Fed would maintain the current “floor” system, in which its choice of the interest rate it pays on reserves drives monetary policy. It also has been clear that banks would have a greater demand for reserves than in prior expansions. That’s because the central bank now pays interest on those reserves, and post-crisis regulations require banks to keep a lot more cash and other liquid assets on hand.

rest at link

https://www.bloomberg.com/opinion/articles/2019-02-05/stop-worrying-about-the-fed-s-balance-sheet

 

for a moar balanced look at this see this

 

https://www.zerohedge.com/news/2019-02-05/feds-dudley-explains-how-i-learned-stop-worrying-love-feds-balance-sheet

 

The FRB muppets out in full force today.

 

 

 

https://www.zerohedge.com/news/2019-02-05/feds-dudley-explains-how-i-learned-stop-worrying-love-feds-balance-sheet

Anonymous ID: 113806 Feb. 5, 2019, 8:26 a.m. No.5037287   🗄️.is 🔗kun   >>7827

Trump Nominates Former Bear Stearns Chief Economist To Lead World Bank

 

In a report that elicited chuckles from some corners of Wall Street, the Washington Post reported late Monday that President Trump planned to nominate Treasury Undersecretary for International Affairs David Malpass - who, in addition to serving as the chief economist at Bear Stearns as the investment bank spiraled into bankruptcy, also worked in the Reagan and Bush the elder administrations - to be the next president of the World Bank.

 

Due to a decades-old agreement with European nations, Washington picks the head of the World Bank while Europe chooses the head of the IMF. Since 1944, the World Bank's 12-member board has never refused to confirm Washington's pick, meaning that Malpass's confirmation is virtually assured - barring a unforeseen and unprecedented break with unprecedented.

 

One "person close to Malpass" told WaPo that he would seek to be a "constructive" World Bank president, though he declined to comment on Malpass's agenda beyond saying he would seek to protect US interests and raise incomes in developing nations.

 

Of course, given his reputation as a skeptic of global institutions like the World Bank, speculation about Malpass's plans for the bank will almost certainly be the subject of widespread speculation. Since joining the Trump Administration, Malpass has offered some scathing criticism of the institution, once describing the bank as part of a "giant sprawl" of international organizations that create "mountains of debt without solving problems." He has also accused the World Bank of "mission creep" and of prioritizing its own growth over that of the recipients of its funds. Echoing Trump's push to cut costs at the UN, the Economist described Malpass as a "cost cutting crusader". Indeed, Malpass is a skeptic of the very organization that he is being tasked to lead. A noted China hawk, Malpass has been heavily involved with the US-China trade talks, and has also been critical of the World Bank's loans to Beijing.

 

At least one former Wall Street economist pointed out the irony in appointing Malpass to run a global organization tasked with fostering economic growth and stability, particularly in the emerging world, after the Treasury official failed to foresee the impending demise of his former employer.

 

Can I nominate myself to run the World Bank? After all, I was the chief economist for a bank that didn’t fail during the global financial crisis.

— Stephen King (@KingEconomist) February 5, 2019

 

The current World Bank president, Jim Yong Kim, stepped down on Feb. 1 after more than six years in the post to take a job at a firm focused on infrastructure development in foreign countries. The official announcement of Malpass's candidacy is expected on Wednesday.

 

https://www.zerohedge.com/news/2019-02-05/trump-nominates-former-bear-stearns-chief-economist-lead-world-bank

 

https://www.zerohedge.com/news/2019-02-05/trump-nominates-former-bear-stearns-chief-economist-lead-world-bank

Anonymous ID: 113806 Feb. 5, 2019, 8:59 a.m. No.5037586   🗄️.is 🔗kun   >>7843 >>7876

>>5037410

>Also of note that they've increased their CAPEX significantly**, yet the amount in their money market accounts doubled.

 

That is the forex trading or derivatives assets being applied to wherever they want imo.

 

**That is the cap 2 on the earnings report.

Second highest in history of company.

 

>The biggest anomaly

cute isn't it

 

>Have hit a roadblock here though without further assistance provided

 

This is why these are just something that tells the story they want them to. Everyone forced to focus on a $1.91 EPS share gain but no one wants to talk about how it was achieved.

 

Absent any real documentation regarding Dfly that is about as far as it can be taken imo as it will just become moar and moar of a catch-22 as nothing any of these company's do is easily explained-or traceable. Apple, Intel, NFLX..they all do this is some way or another. They all know they can continue to go to the well with whatever trading or paper vehicles they need to use to achieve these results.

That doesn't even touch what they were actually doing with all that money flow since we are talking china and forex it could be anything. Not many rules enforced there imo.

 

> See no divestitures in the 2018 report

They gave Dfly away or it was so cheap they used the money flow from those two area's forex and derivatives to show something else or another story habbened.

 

Excellent work anon.

I got tired of going through those year's ago as it mattered not how they achieved the 'results'.

Knew they were a bunch of bullshit anyway.

 

If I could pop a trade on and get out while riding the flow, that is what mattered most to me. Hated the system but one guy is not going to change it so it's feast or famine.

 

Now we get to change it!

o7

Anonymous ID: 113806 Feb. 5, 2019, 9:06 a.m. No.5037671   🗄️.is 🔗kun

>>5037517

look where it came from…

I wasn't going to correct it with my tag as it still is a source and reportable news.

But yea they probably just wanted to post an article they wrote for hits from here.

 

lb or pb next time

Anonymous ID: 113806 Feb. 5, 2019, 9:24 a.m. No.5037902   🗄️.is 🔗kun

>>5037843

We all work together. I will save the post numbers for use later.

It's a problem during the day. These bakers don't want any of this stuff made notable so I save and call out later. Or in last nights case we had a real baker that I gave all the stuff I posted yesterday anoon too.

 

These pricks on Wall Street need to go in the worst way.

Years from now you can look at today and say..I did that.

o7