Fear is Receding while Risk is Increasing

The FED Reserve Additions (the infamous not QE)

This belief that the FED addition of reserves to allow better liquidity is going to help the stock market is wrong headed.  This FED action is just an attempt to forestall a seize up. What it means in a bigger sense is that the FED is going to try to not lower rates.

What I Think

I think the commentators who view the recent turn-up in the ten year yield and the un-inversion as signs that the China Tariffs situation is being worked out and that a soft Brexit is going to occur may be off track.

Two better possibilities come to mind. First, yield is more important than yield curve at this point. Secondly the FED is coming to the realization that we have a management, not systematic problem in the US and British economies. Zero interest rates will not solve the problem, only a change in management. To that end, Impeachment and removal and a second British referendum are becoming real possibilities.



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