by There are all of these articles out there about how much the Fed has increased Reserve Assets at the Depositories and how it is somehow causing the recent increase in equity share prices... here are the statements:From Dec. 11 red circle: Here from Jan. 15 red circle: they haven't even been increased in over a month... Reserve Assets at the Depositories have been STABLE for the last month... HELLO!!!!Reserve Assets at the Treasury (blue circle) however HAVE BEEN increased by fiscal policy...And now this all is probably going to reverse in February as first of the month fiscal transfers and IRS Tax Refunds starting throughout the month will reduce the Treasury assets and increase the Depository assets by (if we use previous year's policy as a guide) by about 0B and the Fed is adding
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There are all of these articles out there about how much the Fed has increased Reserve Assets at the Depositories and how it is somehow causing the recent increase in equity share prices... here are the statements:
From Dec. 11 red circle:
Here from Jan. 15 red circle:
they haven't even been increased in over a month... Reserve Assets at the Depositories have been STABLE for the last month... HELLO!!!!
Reserve Assets at the Treasury (blue circle) however HAVE BEEN increased by fiscal policy...
And now this all is probably going to reverse in February as first of the month fiscal transfers and IRS Tax Refunds starting throughout the month will reduce the Treasury assets and increase the Depository assets by (if we use previous year's policy as a guide) by about $200B and the Fed is adding another $60B per month via permanent asset purchases... maybe +$260B...
So we may see these balances at the Depositories surge from present levels to over $1,900B in about 30 -35 days ending first week of March... maybe +$250Bish in 30-35 days...
Depositories are going to have to sell something in response...
They are going to have to liquidate either other non-risk assets or risk assets or a combination thereof in order to maintain a stable regulatory leverage ratio...
They haven't had to sell anything for the last month due to Reserve policy for purposes of leverage regulation... the Reserve Assets have manifestly been stable...
In February though, they are going to have to sell something .... in order to maintain stable regulatory leverage...
NOT a recommendation...