JPM Says QT "All Over Now" Paving Way for YCC/QE
One Step Closer to Financial Repression
Table of Contents:
Bottom Line
JPM QT Analysis Summarized
Why They are Ending QT
JPM Analysis
Excerpts from the ZH Post: It’s All Over Now
1- Bottom Line:
ZH makes it almost official. QT is done, The Fed is starting to manage a liquidity crisis on the horizon, and Rate Cut chances just upticked.
Between Nick Timaros’ WSJ comments and JPM’s Jan 12th report (attached at bottom) QT is done and as conjectured in our Monday Arcadia Economics SilverFix video, QT is on its death bed.
What does it mean for gold?
To the extent the markets were not ready for this its adds buying of one type and lessens buying of another type. Those believing the Fed will ease and monetize their debt are closer to being correct and will be buying. Those believing the Fed would not do so and risk a banking collapse with the BTFP coming to an end will not be buying.
Thus; bullish for inflation (financial repression and eventual QE), bearish for banking crisis redux. But we all knew the Fed would have to eventually choose inflationary debasement over deflationary collapse.
Net effect: normal analysis says nothing will happen in the short term (watch stocks closely), bullish in long term. The debt needs to be financed, it will not go away. Watch the dollar.
Most importantly, we think the Fed not disappointing markets this time was a sign things were getting close to something unforeseen happening. This seeming capitulation will remove a little market uncertainty as trust creeps back on the credit side. It adds stability. Net net, that is not bullish for Gold for the next 48 hours
2- JPM QT Analysis Summarized
Here is the JPM report (attached below) key points summarized by us.