Hi readers.
Happy New year to all the Chinese readers.
Market are in a side ways action at the present time while Asian markets are closed for the festivities
Crypto market has had a pop and is trading higher but when you really look into whats really going on you will notice that crypto's are starting to trade like the metals. Where its the paper that moves the price not the supply/demand. So while everyone is telling you to jump in and buy it you want to be careful as its the exchanges moving price not the demand for the coins. regardless of which coin it is. Enjoy the ride and play it for what it is.
I did some investigating work to see if the FED is tapering its balance sheet as they said they would.
In November the FED said they would taper $15 billion a month and then in December they said they would double it to $30 billion a month.
So from the $120 billion it was supposed to drop to $105 in December and in January its supposed be $90 billion.
So this is what they announced to the market and we had the media saying that the Fed was serious about combating inflation!
So here are the fact!
This is what the Fed did buy for 26th Dec to the 28th January
$63.9 billion in Treasuries bonds
$45.3 billion in MBS (Mortgage Back Securities)
A total of $109.2 billion now they said the $90Billion number so what gives, and yes we have seen yields on the US 10 year bond move from 1.50% to 1.94%.
So you can look at it both ways worse and disaster.
FED is way behind the curb and playing the hope game begging for oil to fall so they can bring down inflation.
Option 2 if the FED did taper the amount they said the bonds would have gone into a tailspin and collapsed the stock market.
So credibility for the FED zero, as I said before the FED is snookered into a corner, and looking for an escape goat. Politically the Administration is trying to start a war with Russia but can't do it as the US doesn't have the gas to supply Europe. People would rebel against there governments and the US if they tried. Remember Americans love to play the Hollywood game, and after Afghanistan no country trust the US Administration, not even the UK.
So lets look at the next strategy which the FED is looking at.
Dumping junk bonds onto the market in an orderly fashion, the FED does hold a couple of hundred billion in shit paper, this is BBB and lower, what I'm told by those in the know that companies who are holding inventories are the ones the FED is sell and force those companies to sell there inventories to raise money.
Anticipate Junk bonds to take a hit and the market to become volatile once again after the 12th of FEB.
At the present time traders are looking at the market as a buy the dip play but lets see for how long.
https://fred.stlouisfed.org/release/tables?rid=20&eid=1193943#snid=1193945
I put a link on for you all to see for yourselves how the FED hasn't tapered.
As Always use the above as an indicator to your own work.
Ask your financial advisor on more on the above.
I am not a financial advisor, I am a Financial Astrologer.
