Core Insights - The Federal Reserve's balance sheet experienced significant year-end liquidity shifts, with the Standing Repo Facility (SRF) spiking to $75 billion before falling back, and Overnight Reverse Repos (ON RRPs) reaching $106 billion before also declining [1][14][15] Group 1: Standing Repo Facility (SRF) - The SRF saw a one-day uptake of $75 billion on December 31, which increased the Fed's total assets temporarily [6][7] - By January 2, the SRF balance fell back to $23 billion, with expectations that it will approach zero in the following week [6][7] - The SRF allows approved counterparties, primarily large broker-dealers and banks, to borrow overnight at a rate of 3.75%, enabling them to profit from lending in the repo market [11][12] Group 2: Overnight Reverse Repos (ON RRPs) - ON RRP balances spiked to $106 billion on December 31, reflecting a significant influx of funds from money markets depositing at the Fed [14] - By January 2, ON RRP balances dropped to just $6 billion, indicating a rapid unwinding of year-end liquidity [14] Group 3: Treasury Bills and Balance Sheet Management - The Fed added $38 billion in short-term Treasury bills in December, with $15 billion replacing mortgage-backed securities (MBS) that came off the balance sheet [2][19] - The Fed's strategy aims to shift its balance sheet composition towards shorter-term securities, with T-bills expected to grow while MBS are phased out [18][23] - The Fed's total assets rose by $104 billion to $6.64 trillion, largely due to the SRF spike and Reserve Management Purchases (RMPs) [27] Group 4: Mortgage-Backed Securities (MBS) - MBS holdings fell by $15 billion in December to $2.04 trillion, with the Fed's plan to continue reducing MBS until they are eliminated [23][24] - The decline in MBS is primarily due to reduced pass-through principal payments as mortgage refinancing and sales have decreased significantly [24][25]

American hot money piling into some foreign markets produced gigantic gains in 2025 (Spain +49%). The S&P 500 Index soared by 16.4% in 2025. Since the Liberation Day bloodletting bottom on April 8, it soared by 38%. Over the past three years of 2023-2025, it soared by 79%. Since the March 2020 low, the index soared by 208%, despite two sell-offs in between. These are huge gains.In March 2020, the Fed unleashed its mega-massive QE program, to outdo all prior QE programs, and cut short-term interest rates to ...

Core Insights - The discussion centers around the impact of AI on productivity and economic growth, with a focus on the expectations for 2026 and the implications for corporate earnings and stock prices [1][2][3] Group 1: AI and Productivity - AI is seen as a key driver of productivity, allowing for economic growth without significant inflationary pressures, which is favorable for central bankers [1][2] - Fed Chair Jerome Powell has acknowledged that AI usage is likely increasing productivity, with GDP growth expectations for 2026 raised to 2.3% from 1.8% [2] - The Fed has also lowered its inflation expectations for next year to 2.4% from 2.6%, indicating a belief that productivity gains from AI can coexist with moderate inflation [2] Group 2: Corporate Earnings and Stock Market - The estimated earnings per share for the S&P 500 in 2024 is projected to be $3922, which would set a new record [1][3] - Concerns about high valuations in the stock market are countered by the expectation of record corporate profits, suggesting that high stock prices may be justified [3][4] - Companies are focusing on increasing revenue per employee rather than hiring more staff, which could lead to significant outperformance for those that can effectively leverage AI [2][3] Group 3: Micron Technology - Micron has seen its stock price triple this year, driven by demand for its DRAM products, particularly for AI data centers [2][3] - The company has announced it will no longer produce memory chips for the consumer segment due to high demand from AI applications, indicating a shift in focus [2] - Micron's stock is considered vulnerable to price fluctuations based on memory chip prices, which could impact its future performance [3]

Ed Yardeni predicts the “Roaring 2020s” stock market rally will persist through 2026, but he warns that aggressive fiscal stimulus from the Donald Trump administration poses a significant risk to the economic outlook.Waking Bond VigilantesIn a recent interview, Yardeni highlighted a potential collision between government spending and the bond market. He noted that Trump and the Treasury Secretary Scott Bessent have promised “humongous refunds” for taxpayers, potentially retroactive to the beginning of the y ...

Treasury Secretary Scott Bessent has confirmed the administration is actively interviewing candidates for the next Federal Reserve Chair, seeking a leader committed to shrinking the central bank's footprint and ending the era of perpetual quantitative easing (QE).The ‘Engine of Inequality’Speaking on the All-In Podcast for a year-end economic review, Bessent outlined a sharp pivot from the monetary policies of the last 15 years. He argued that the Fed's “gain of function” experiments—specifically the large- ...

"Love Language" is an essay that argues the Fed's new Reserve Management Purchases (RMP) scheme is just a new way to disguise money printing.RMP > QE$BTC 2 Da Moon!https://t.co/uHRoB4VCfR https://t.co/jbh6TF5b5c ...

Arthur Hayes just laid out his Bitcoin roadmap for the next three months — and it ends at $200,000. The angel investor and Maelstrom fund CIO published a new essay on Friday, arguing that the Federal Reserve is printing money through a new programme, dubbed Reserve Management Purchases. And once investors realise its effects resemble those of quantitative easing, Bitcoin will explode higher. “As the market equates RMP to QE, Bitcoin will quickly retake $124,000 and punch quickly towards $200,000,” Hayes ...

🔥 BULLISH: Arthur Hayes argues the Fed’s new Reserve Management Purchases are effectively QE under a different name, warning they enable unchecked money printing that could drive $BTC toward $200,000 in 2026. https://t.co/FQoRXq6Z2m ...

I must admit I was completely wrong because I said one year ago that Bitcoin will go to 300K by the end of the year. So that was unfortunately not the case. Now that we didn't see that the question is why.I really think it's because we didn't have any money printing. Without QE there will be no bull market and no alco season. So now they finally stop QT and now that they will start buying T bills again and start doing the QE.I think that hopefully 26 and 27 could be that bull market that we were waiting for ...

The U.S. Federal Reserve cut interest rates by 25 basis points last week, but that may not have been the biggest news to bitcoin (BTC) bulls. The real surprise was the central bank's announcement to start buying $40 billion in short-term U.S. Treasury bills. That sparked a bullish frenzy in the crypto community, and why not? These purchases will expand the Fed's balance sheet, much as the 2020 Covid-era quantitative easing (QE) program and the post-global financial crisis maneuvers that fueled unprecedent ...