{"id":50012,"date":"2019-12-08T13:31:36","date_gmt":"2019-12-08T18:31:36","guid":{"rendered":"https:\/\/olduvai.ca\/?p=50012"},"modified":"2019-12-08T13:31:46","modified_gmt":"2019-12-08T18:31:46","slug":"trapped","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=50012","title":{"rendered":"Trapped"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/northmantrader.com\/2019\/12\/07\/trapped-2\/\">Trapped<\/a><\/h3>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright\"><a href=\"https:\/\/northmantrader.com\/trapped-3\/\"><img decoding=\"async\" src=\"https:\/\/i1.wp.com\/northmantrader.com\/wp-content\/uploads\/2019\/12\/trapped.jpg?resize=229%2C107&amp;ssl=1\" alt=\"\" class=\"wp-image-72364\"\/><\/a><\/figure><\/div>\n\n\n\n<p class=\"wp-block-paragraph\">What? You thought a 850+ point drop in the $DJIA would result in a down week? No Sir. The&nbsp;<a href=\"https:\/\/northmantrader.com\/2019\/11\/30\/unholy-alliance\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>unholy alliance<\/strong><\/a>&nbsp;has struck again. Massive jawboning by multiple administration officials about how well the China&nbsp;trade deal was going, a favorable jobs report and above all, the US Federal Reserve, all contributed to a furious rally to make markets green for the week on (when else?) magic risk free Friday.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">What was the tell? The same tell it\u2019s been every week since the beginning of October. When the Fed\u2019s balance sheet rises so does the market. One down week in the Fed\u2019s balance sheet coincided with the only down week in markets since then.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Before you know it you have a trend (via zerohedge):<\/p>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/northmantrader.com\/?attachment_id=72407\"><img decoding=\"async\" src=\"https:\/\/i1.wp.com\/northmantrader.com\/wp-content\/uploads\/2019\/12\/fed.jpg?resize=467%2C401&amp;ssl=1\" alt=\"\" class=\"wp-image-72407\"\/><\/a><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">This is how predictable our markets have become. Tell me the size of Fed\u2019s balance sheet next week and I\u2019ll tell you what markets will do next week. Is it really this farcical? It appears so.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">By that measure of course we can presume markets will just keep rising until next June as the Fed has indicated \u201cnot QE\u201d will continue until then and their daily repo operations are now the ones on autopilot.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Investors are rightfully cheering gains having now realized that nothing matters but the Fed.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But be careful in cheering too much. All this action hides a rather very uncomfortable fact, a fact that may eventually see the air come out of this ballon faster than it is going in.<br>And that fact is that the Fed, and all other central banks, are trapped. Trapped in a coming disaster of their own making.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">And be clear: As we saw this week again, the air can come out quickly. After all 90% of November gains simply disappeared in a matter of a couple of days. The subsequent furious comeback leaving a rather unusual weekly candle on $SPX (I\u2019ll discuss this separately in an upcoming technical update).<\/p>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/northmantrader.com\/?attachment_id=72405\"><img decoding=\"async\" src=\"https:\/\/i1.wp.com\/northmantrader.com\/wp-content\/uploads\/2019\/12\/SPXw1.png?resize=639%2C275&amp;ssl=1\" alt=\"\" class=\"wp-image-72405\"\/><\/a><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Trapped What? You thought a 850+ point drop in the $DJIA would result in a down week? No Sir. The&nbsp;unholy alliance&nbsp;has struck again. Massive jawboning by multiple administration officials about how well the China&nbsp;trade deal was going, a favorable jobs report and above all, the US Federal Reserve, all contributed to a furious rally to [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[49,124,303,431,534,661,23808],"class_list":["post-50012","post","type-post","status-publish","format-standard","hentry","category-economics","tag-balance-sheet","tag-central-banks","tag-fed","tag-interest-rates","tag-monetary-policy","tag-qe","tag-sven-henrich"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50012","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=50012"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50012\/revisions"}],"predecessor-version":[{"id":50014,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50012\/revisions\/50014"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=50012"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=50012"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=50012"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}