This Secret Code Tells You That The “Smart Money” Is In Trouble

Before last week’s FOMC meeting, a few well connected banker talking heads started floating the rumor that the Fed would reverse course on tightening sooner than anyone currently expects.

Naturally, CNBC, the mouthpiece of the mob, ran with the story, breathlessly.

The Fed has a surprise in store that could mean an early end to interest rate hikes
— blared the headline on CNBC.com. The first three paragraphs of the story were epic breathlessness.

    The Federal Reserve could have a surprise in store for investors this week, even if everyone already knows the central bank is raising interest rates.

    Along with the quarter-point increase in the Fed’s benchmark short-term target, the policymaking Federal Open Market Committee is likely to announce another change that would signal an early exit from its history-making program to reduce the level of bonds being held on its balance sheet.

    The mechanics are a little complicated. Yet it suggests that what once appeared to be an operation to shrink the amount of bonds the Fed owns that would have run well into the next decade could be wrapped up next year, or early 2020 at the latest.

Now, I’ve been tracking and reporting on the Fed ever since 2002, around the time the Fed began publishing reams of data about its operations on the internet every day. Analyzing liquidity, particularly central bank liquidity and its effects on markets, is the nexus of my research and analysis, along with technical analysis.

So I know something about this.


Track The Fed Yourself…Right Here

So you think you want to be a liquidity analyst? Here’s a list of links to get you started.

H 41 – Weekly Fed Balance Sheet By tracking this over time you can see the growth or shrinkage of the Fed balance sheet. This is virtually in real time, published 1 day after the close of the weekly statement period.

H8 Weekly US Commercial Banking System Balance Sheet There’s a wealth of data here on the condition of a slew of banking system indicators. It’s published 9 days after the close of the weekly statement period, so it’s timely. Again, by tracking over time, you can see the liquidity flows.

Click here to continue…