International Forecaster Weekly

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Last March, in 2020 “they” decided that in a year, they would end the “SLR” program. What’s that you ask? Policy manipulation that gave banks more latitude on what they could hold, reserve requirements, etc.

Bob Rinear | March 20, 2021

Last March, in 2020 “they” decided that in a year, they would end the “SLR” program. What’s that you ask? Policy manipulation that gave banks more latitude on what they could hold, reserve requirements, etc.

So now it’s March 2021 and most participants were pretty sure that the Feds would NOT end the program on March 31, because, well… you know. They love anything that helps banks and thus markets go higher.

But the Feds did agree to end the program. Does that sound fishy to you? It should. There’s an unwritten rule that trumps all others and that is “nothing can be looked at as the Fed behind any reason the market might fall.”  Yes folks it’s true. They love their perch as the elitists that are so smart they can set economic policy for not just 350 million people, but for literally quadrillions of debt instruments, called derivatives.

So when they announced that they were going to end this program, they also said that they were inviting requests to basically talk about what it was, and does it need to be in place, but “amended” some how. That, in my opinion is simply smoke screen. Masterpiece Theatre.

Why? Well they KNEW if they let the loosening of requirements expire and banks and institutions had to tighten up certain areas, the market would pout and pout it did. On Friday morning the DOW was down over 300 points. The S&P down 25. Couple that with Thursdays reaction to the ten year hitting 1.755 and we had a legit selloff going on.

As the day wore on however, they felt a little better that in due time, like next week, Powell would indeed “do something about this.” Well it didn’t take that long and Powell had already put out a statement basically mimicking Draghi by saying “they’ll do what it takes” because the economy isn’t as solid as they want.

That got them all happy and the NASDAQ, which had been the leading index, was up by 120 coming into 1 pm. The DOW had gone from down 320 to down just 123.

I suggest however that his jawboning was just the start. Remember how I said that the Feds can NEVER be seen as the ones behind a market slide? With him letting SLR expire, you KNOW he’s got something up his sleeve, so what is it? It’s YCC, Yield curve control. I flat guarantee he’s going to launch some form of perverted “twist” like they did back in 09/10 to get control of things.

And he desperately needs it. They HAVE to control that ten year or the “inflation” cat is out of the bag. Oh that stuff? The stuff that the Fed’s say isn’t even approaching their 2% target? Yeah that stuff. Someone thinks it’s considerably higher and that’s why those rates have been leaping higher.

So, my guess is that sometime over the next week or so, they’re going to launch a revised edition of the yield curve twist, adjusting their buying to continue keeping rates low. They have to for several reasons. With the amount of debt they’ve been creating ( trillions upon trillions) the cost of servicing those debts increases exponentially when rates rise. But secondly, the ONLY explanation for rising rates is what??? INFLATION.  Now that’s an issue. How can you have the bond market reacting to inflation, if the Feds say they don’t have any, or not nearly enough? Clearly they’d be looked to as outright liars, and while they are and everyone knows it, it can’t be officially stated.

So one of two things, or maybe both things are going to happen. They’re going to jawbone the market, no question. But then they’re either going to jam oil insanely higher, so they can blame ALL price inflation on oil and the Middle East, OR… we’ll get some perverted “twist” program, or hey, maybe both.

The market will not care which way he does it. All they care about is cheap money and if it’s via a new twist program fine. If it’s by hiding price inflation via soaring oil, fine. See, that’s the perfect scapegoat. “Oh it has nothing to do with us printing money, it’s because of the rise of oil that prices are rising!” is a classic Fed line.

Don’t forget folks, we can NEVER do without oil. It’s in virtually every product you buy. Depending on who you listen to, oil is the basis for approximately 6 – 8000 things we use on a daily basis. From clothing to boots, to platic bottles to safety gear, to you name it, pertroleum is involved in its manufacture. Jam oil higher and “Walla” you have price inflation. The perfect smoke screen.

Keep an ear out for our dear Mr. Powell. He’ll be coming soon to a market near you, with his new solution to try and contain the inflation beast, whether by hook or crook. I’m betting on crook, as they are criminals.  Oh, and the market? It should love every minute of it. Good luck out there.