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I TOLD You So! 2/13/20


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LEE'S FREE THINKING

Ewww!!! What’s That Red Stuff?

by Lee Adler •  • 0 Comments

ES Futures Hourly Chart

Stock Market Trading Setup for Thursday February 13, 2020 I have been beset with brainfarts lately. Must be old age settin in. Bad enough when you let em loose in the sofa cushions, but in headlines on your own website? Ohgawd, how embarrassing! 

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Now the Fed says it will count Treasuries as reserves. Makes absolutely no difference whatsoever. None. Zero. Zilch. Nada. Zip.  Reserves aren't the issue. They are a read herring.

There are plenyty of reserves. The problem is that there's not enough cash in the system to absorb all the Treasury issuance without the Fed buying some of it. 

The Fed's mistake is buying too much. The dealers didn't need that much. But now, the Fed has driven asset prices so high that the system is absolutely dependent on the Fed continuing to support prices. Too much leverage. 

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