Fed Suggests Economy Is Stabilizing

The monetary aggregates have been flat for months, the problem will come when it is time to drain 1.5 trillion in liquidity from the market to return to a normal fed balance sheet and at the same time purchase a little over 1 trillion in mortgage back securities adding an equal amount of money back. One finds it difficult to think removing almost 3 trillion is very practical. A 1 per cent change in a 30 treasury will change the price almost 20 per cent for a retail investor and crush PE multiples when the yield curves shifts up from 0.