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Thought it would be instructive to take a snapshot of some highlights of the federal reserves balance sheet before the great unwind. Than added the massive deficits the Trump administration is going to run. This is more than just bad timing.
Notice they have no treasury bills. There U.S treasury securities are just notes and bond. There is going to be massive pressure on the long end of the yield curve.
Some are saying this is just another head fake by the fed. If you pay close attention to all the FOMC ( see here, here, and here) you can see they started what I will call “Phase 1”. Additionally, in their recent speeches and talks, they are getting more vocal about what they are going to do. I believe this time they will actually attempt to execute their plan. The odds of this going off smoothly and without any hiccups are close to zero.

Investors can not get enough of Tesla.

They gobbled up over half a billion dollars of Tesla’s debt even though they are burning money.
These stock prices are way out there.

Greenspan, the man who said bubbles can not be foreseen, told Bloomberg there is a bubble in stocks and bonds.

Greenspan gave a speech in which he stated the following (my emphasis):

Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? And how do we factor that assessment into monetary policy? We as central bankers need not be concerned if a collapsing financial asset bubble does not threaten to impair the real economy, its production, jobs, and price stability. Indeed, the sharp stock market break of 1987 had few negative consequences for the economy. But we should not underestimate or become complacent about the complexity of the interactions of asset markets and the economy. Thus, evaluating shifts in balance sheets generally, and in asset prices particularly, must be an integral part of the development of monetary policy.

He calls it “irrational exuberance”. He never mentions the federal reserve is the culprit behind the bubbles. From the 8/19/97 FOMC transcript.

Cathy Minehan doesn’t think rising asset prices is inflation. Above are two clueless people who ran the US economy for an extended period of time. They could not see the dot com bubble. They did not realize they created the housing bubble.

No recession is in sight…

Closed out VOO. We will get back in at a better price. Looking to add KBE at a lower price in the future. Ruff week.

Apple’s pile of cash.Naysayers say most of this is held outside the USA. My response: so? If you had a bank account in France would you not consider it cash?

Looking at some potential new stocks to buy I come across Tesla. Two issues  jump out at me when taking a birds eye view.
First, I look at their cash flow.

Not bad. I look a little deeper to see where all this cash flow is coming from.

Answer: Net cash flow from financing…
Than I take a look at the free cash flow (FCF).

The stock price continues to go up. Investors do not seem to be concerned.
Second, I don’t like their story. Maybe I should say, I don’t understand their story. I don’t understand why people waste money on new cars. Buy an indestructible Japanese used car. They run for 250K miles.

As expected, no rate hike. Full statement below.

Information received since the Federal Open Market Committee met in December indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Gains in employment, household spending, and business fixed investment have been solid, and the unemployment rate has stayed low. On a 12-month basis, both overall inflation and inflation for items other than food and energy have continued to run below 2 percent. Market-based measures of inflation compensation have increased in recent months but remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with further gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will remain strong. Inflation on a 12‑month basis is expected to move up this year and to stabilize around the Committee’s 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1-1/4 to 1‑1/2 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

Voting for the FOMC monetary policy action were Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Loretta J. Mester; Jerome H. Powell; Randal K. Quarles; and John C. Williams.

Personnel saving rates have plunged to more than a decade lower. It is not to far away from making an all time low, since accurate records have been kept anyway. This is a product of federal reserve policy over the last few decades. Pushing interest rates down discourages savings and encourages borrowing. Capitalism needs capital.