PST - It's The Fed's Balance Sheet Stupid!
By Landon Whaley
There has been a ton of ink spilled (digital and literal) on speculation about changes to the Federal Reserve's policy and the timing of those changes. But despite all this coverage, no one seems to be discussing the balance sheet.
No matter what the Fed does (or doesn't do) with rates, as long as it is shrinking the balance sheet, financial conditions will continue to tighten. If history has taught us anything, it's that a central bank that continues to tighten after growth begins slowing is jump-starting a recession.
Remember, every $200