An update of the weekly Federal Reserve balance sheet charts for 23/7/11. The Federal Reserve’s balance sheet contracted by around $7 billion dollars; something that is rarely seen in this age of central bank balance sheet expansions…

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Well, the past week was characterized by relief more than anything else. Resultantly, we saw a positive week for the equity indices, oil, the metals and non-dollar currencies. In defiance of the daily flow of news, we stick to our bearish guns because of the generally negative monetary dynamics in operation. As for the perilous task of short-term timing in the speculative financial markets? We don’t know, but our hunch is that we’re on the eve of another leg down in ‘risk assets’. Moreover, the lagged daily treasury statement charts seem to be confirming this at present.

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