RISE - It's The (Fed's) Balance Sheet Stupid
By Landon Whaley
Investors are paying attention to the wrong aspect of the Federal Reserve policy. I've seen enough Fed soundbites from both hawks and doves over the last few weeks to last me a lifetime. However, as is usually the case, people are focused on the wrong aspect of monetary policy, and their pre-occupation with rate hikes (and cuts) is going to get them the same woodshed treatment they experienced in Q4 2018.
Pre-crisis, the most important aspect of central bank policy was probably the action a central bank took with short-term rates. But