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2020 is off to a rocking great start! That is if you’re a criminal banker. And, the money just flows!!!

… means the Fed just injected a total of $99BN to keep the levitation party going, and confirms that the repo market remains paralyzed.

Worse, any attempts to drain liquidity from the repo market, or generally slow down the shrinkage of the balance sheet, will be met with failure. It is also another indication that the repo market now holds the Fed hostage, with Powell now trapped in not only injecting liquidity via QE4, i.e., the monetization of T-Bills, but continued reliance on repos in the $250BN range.

Of course, should the Fed threaten to pull even a bit more liquidity than the market is comfortable sacrificing, and stocks get it. The flip side too: as long as the Fed keeps growing the balance sheet at a rate of about $100 billion per month, the market meltup will continue.

Best economy ever! As they boasted the other day, it is now virtually recession-proof.*

*”virtually recession-proof” does not preclude the (mathematically certain) proposition of depression or total collapse.