"QT" Pace to Quicken

The Federal Reserve has just started to reverse the unprecedented expansion of the Fed balance sheet that commenced in October 2008. After a very slow start last October, the FOMC intends to quicken the pace of security sales and/or runoffs in the second half of this year and into 2019-2023. The FOMC intends to increase the pace of monthly sales to $40 and $50 billion/month, in the next two quarters. We think the balance-sheet contraction will complicate the interest-rate tightening that is ongoing, and may have adverse or unexpected consequences on security and foreign-exchange markets. The Fed estimates that "balance-sheet normalization" could take three to six years. We note that it took six...  years to quintuple the Fed's balance sheet. The explosive rise in Fed credit started at $0.9 trillion in September 2008 and took the balance sheet to $4.5 trillion in December 2014. Last September, the FRB/NY projected that "normalization" would continue to a "2020-23 target size of $2.5-$3.0 trillion." That's a target that only cuts the 2008-14 Fed credit expansion in half.    more

Argus President John Eade discusses the recent Sector Weight changes

Markets stay undecided

Stocks are mixed at mid morning Friday. The Nasdaq is a touch below breakeven, but the other major indices are trading in the green. The trade today seems to be on headlines that U.S. officials are trying to open negotiations with China before tariffs are scheduled to go into effect in July. ...  more