3/26/2020 Market Update – A discussion of all that has changed since my last podcast update

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-The Fed has acted swiftly since my last podcast on Sunday. Since Monday morning, the Fed slashed rates by 100 bps to effective 0%, announced unlimited Treasury and agency mortgage purchases, and become primary lender and liquidity provider to corporations.
-The Fed balance sheet should hit $6 trillion over the next few weeks. Given the upcoming $2 trillion fiscal stimulus package, the Fed balance sheet could hit $10 trillion by the end of the year.
-The Fed announced they may begin to buy bond ETFs to stabilize bond markets and yields going forward.
-The central planners knew the USDX was rising too high and announced that the Fed would act first with their monetary programs. While these Fed initiatives are dollar bearish, the USDX continues to remain elevated. The ECB and BOJ remain relatively taciturn, but also need to act more forcefully than currently.
-As long as bond yields fall and inflation growth sinks, the Fed could theoretically buy every asset available.
-Bernanke making a case for Section 14 of the Federal Reserve Act to be changed to include corporate securities and state and local debt.
-Keep in mind that 30-year mortgage rates could hit 2.5% by end of year. Those who are hoping for a residential real estate collapse may be disappointed.
-I would have to believe that stocks may be subject to official intervention here.

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