I was looking at the FED recent balance sheet and found that the 2008 QE impact is still here.
https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm
The FED balance sheet skyrocket from $900 billion to $4.5 trillion between 2008 and 2015. It started to unwind its balance sheet in October 2017 and targeted to shrink the balance sheet down to below 3 trillion by 2020, which was trying to reverse the 2008 QE.
But everything suddenly stopped when the balance sheet was down to $3.76 trillion in September 2019. The overnight lending rate surged to almost 10% in Sep. 2019, which caught the FED off guard. To keep the bank from collapsing, the FED has no choice but to inject liquidity. From Sep.2019 to the beginning of 2020, The Fed injected another $1 trillion liquidity, and its balance sheet went back up to $4.5 trillion.
The COVID-19 jumped in right after the $1 trillion injection earlier this year. By this Monday Mar.23rd, the FED balance sheet is $5.2 trillion.
They surely understand that everything will inevitably head to collapse if they keep printing $, but still printing. Besides, the US has $23 trillion debt, debt to GDP ratio is 108%, how can you pay this much back??
The answer to the conflicting behaviors is obvious: they are just stalling from crashing. But how long can they stall? Why they are stalling? What are they waiting for? Not sure, but let's see.
tl;Dr hedging the downside risk, SPY 180p
Submitted March 27, 2020 at 11:43PM by x-c_c-x https://ift.tt/3bu53BW
