Problem of a Timid FED, with late trading update

The yield curve is showing what happens when you have a FED that doesn’t address the problem, i.e., the ballooned FED Balance Sheet. The timid response of raising the FED funds rate 4 or 5 times is not going to get the job done on fighting inflation. What you see is short term rates rising while long-term rates are just being lightly drug along. The FED needs to STOP QE immediately and start selling Bonds in February if they want to start to bring down the embedded inflation factor.

Today is a day when it is difficult stay in a Macro long-term mood. While there are a few guru’ like Jeremy Grantham talking about 50 % down in the market, from here, with which I happen to agree, there are a lot more talking about picking a bottom today. We had an early volume up spike around the lows early today, bigger than any volume spike on the whole way down this year.

Late update: 12:45 AM CST

We did cover our SPXS and SQQQ shorts in the short term trading accounts here, S&P at 4445, Nasdaq 100 at 14,630.

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