President Trump Impeachment Odds in One Chart

2013: Will Obama Be Impeached? Watch The Stock Market
2017: Will President Trump Be Impeached? America Edges Towards Social Unrest
2018: Will President Trump Be Impeached?

If Trump were to be impeached and removed, a likely minimum target for the S&P 500 is 2400 if its serious enough a charge that GOP Senators would vote to convict. Then the next target would be the resistance line from 2000 to 2008, around 1500, now long-term support if he is removed or resigns. The market will have to tank relatively hard in 2019 to crush Trump's approval because there won't be impeachment in an election year.

PBoC No Reverse Repos For One Month, Waiting for G20

Reuters: China c.bank may have revived repos to drain liquidity in Oct - CSJ
China’s central bank may have drained short-term funds from the banking system in late October by quietly reviving a tool to mop up excess liquidity, a state-run newspaper reported on Monday, citing analysts.

But the China Securities Journal said the possible re-launching of repo operations for the first time in years did not signal a shift in the central bank’s monetary policy stance.

Beijing has loosened monetary and fiscal policy conditions this year as it seeks to cushion the cooling economy and encourage more lending to private enterprises, with further growth boosting measures expected in coming months.

The People’s Bank of China has almost exclusively relied on reverse repurchase agreements, or reverse repos, to pump liquidity into the banking system in recent years.
Chinanews: 央行逆回购连停创纪录 市场猜测货币政策是否转向
Whether monetary policy turns

  What is the central bank's reverse repurchase? The People's Bank of China purchases securities from primary dealers and stipulates that the sale of securities to primary dealers on a specific date in the future will be aimed at releasing liquidity to the market.

  Ping An Securities believes that the suspension of the reverse repurchase by the central bank does not mean that monetary policy is tightening. The central bank's move may be based on the following considerations: First, the current liquidity of the banking system is still at a reasonable level. Second, market interest rates remain low and run smoothly. Third, marginal mitigation of the pressure of RMB depreciation brought about by the US-China spread.

  In this regard, Hongye Futures also said that regardless of whether the central bank has conducted a repurchase operation and the current suspension of reverse repurchase operations, it cannot mean that monetary policy will be tightened. Although the liquidity will converge under the pressure of the tax period or the impact of the end of the month, the overall situation remains reasonable. Usually, at the end of the year, there will be a large-scale fiscal deposit, and with the fiscal expenditure in place, the liquidity problem will be alleviated.

  Looking forward to the future, Ping An Securities said that the tone of China's monetary policy is still neutral and loose, and it will neither turn to tightening nor be fully lenient. First, the current downward trend in economic growth is obvious, and steady growth has become the primary task of monetary policy, which determines that monetary policy will not turn to tighten in the future. The third quarter monetary policy implementation report also proposed to maintain a reasonable and sufficient liquidity, and help stabilize growth through the formation of a “triangular support framework”. Second, the future liquidity is still reasonably abundant, and the liquidity operation continues the management idea of ​​“locking short and prolonging”. The RRR reduction and 1-year MLF operation are more worthy of expectation.
After the Shanghai G20 meeting in 2016, China cut the RRR.


Fed Slashed $39.7 B Last Week

The Fed rolled $17.3 billion in treasuries and $39.7 billion total off its balance sheet for the week ending November 21. If the Fed sticks to the monthly $50 billion target for November, it has to reduce about $16 billion this week. Most of that will come on Friday when treasuries mature, the Fed needs another $13 billion in treasuries to hit its November target. If the Fed plays catch-up for October (and prior months) it could reduce as much as $32 billion.

The S&P 500 Index fell 52 points last week.


Real Estate Investment Share of GDP by Province

Hainan was tops in Q3 at 34 percent according to NBS data. Anhui, Chongqing, Yunnan and Zhejiang round out the top 5.


China Housing Squeeze: Mortgage Rates Rise as Govt Bond Yields Fall

iFeng: 首套房贷利率创年内新高 房贷政策松绑短期无望
Rong 360 data shows that in October 2018, the national first-home loan average interest rate was 5.71%, equivalent to the benchmark interest rate of 1.165 times, refreshing the year high, which is the first-home loan interest rate for 22 consecutive months. The average interest rate of the second home loan in the country rose slightly by 1 BP from the previous month, reaching 6.07%, and also hit a new high in the year. At present, over 90% of the banks have raised the interest rate of the second suite by more than 10%.

The data shows that the top ten cities with the lowest average interest rate in the country's first suite are: Shanghai 5.19%, Xiamen 5.39%, Kunming 5.39%, Urumqi 5.39%, Dalian 5.44%, Fuzhou 5.49%, Beijing 5.49%, Taiyuan 5.49%, Haikou 5.58 %, Chongqing 5.62%.

Banking industry insiders said that if it is purely from the perspective of doing business, banks are still willing to do mortgage business. First of all, the current probability of bad mortgage assets is very low. Second, the loan loan amount is large, long-term, and profitable. A set of mortgages in the north, Guangzhou and Shenzhen are generally above one million. The loan time limit is generally more than 20 years, which can form a very stable asset of the bank.
Chinese government 10-year bonds yield 3.40 percent. The U.S. 10-year yields 3.07 percent. The average 30-year fixed rate mortgage in the U.S. yields 4.94 percent.


Coinpocalypse Begins, Bear Market for Stocks

In September: Crypto Selling Resumes, Monster Topping Pattern on Ethereum, Watch Out FANGs
Finally, cryptocurrencies were the bleeding edge of speculative activity. The breaking of topping patterns in majors such as Bitcion and Ethereum will be a signal that stocks, particularly the FANGs, are on thin ice. Here's Alibaba (BABA), for example, sporting a topping pattern similar to Ethereum. Not as massive a topping pattern or with as low a target, but it will cause far more losses. Ethereum has a $20 billion market cap that could go back to $1 or $2 billion, an $18 or $19 billion loss. Alibaba's market cap is $417 billion. A measured move off its topping pattern would cause $117 billion in losses.

In August: The Coinpocalypse
Finally, this is a classic collapse of a speculative bubble. It might benefit stocks in the near-term, but it strikes me as bearish, and not only because the stock market was tracking with cryptocurrencies earlier this year. Consider a stock such as Nvidia (NVDA) that sold the GPUs used by cryptocurrency miners...
NVDA lost 20 percent on Thursday last week and 12 percent on Monday, and down another 6 percent this morning in pre-market trading. It is down 53 percent off its high in about 6 weeks.

There is very little support for alt-coins and even some that appear to have support levels, such as Monero (XMR) will probably be pulled lower by the undertow. The targets for Ethereum (ETH) and Litecoin (LTC) are in the single digits, if not below $1.

As for stocks such as NVDA, well the pain may have only begun. Support for NVDA is below $50. Initial support is 77 percent below the current price. If this is a bear market and not a deep correction, there is a lot of selling to come.


Fed Balance Sheet Grows By $4 Billion

The Fed's balance sheet increased by $3.96 billion last week. All of it was MBS as treasuries declined $0.016 billion.

Yesterday, November 15, $34.3 billion in treasuries matured. The Fed needs to reduce by $30 billion this month and $44 billion if it wants to make up for missing its target in October. The Fed needs to reduce $56.1 billion in the second half of November because it increased the balance sheet the past two weeks. If it plays catch-up, it would reduce by $72 billion this month (I don't expect it to). On November 30, another $24 billion in treasuries mature.

The Chinese yuan continues to track the Fed's balance sheet.


Chinese Home Prices Rise 1.0 pc in October

It wasn't only third- and fourth-tier cities driving the increase. Prices in Wuhan climbed 2.5 percent, Chengdu 1.7 percent, Hangzhou 1.2 percent, Zhengzhou and Fuzhou 1.0 percent.

Until home prices cool, there won't be a loosening of credit, lest it risk another housing bubble or worse.


M2 Contracts in October

M2 fell 0.34 percent in October. This was the largest one-month decline since an outlier drop of 1.27 percent in July 2014. Growth fell slowed to 8.0 percent yoy and 4.4 percent over the past 3 months.
MLF outstanding also fell in October.


Chinese Banks Follow Through on Mortgages for Rent as Central Bank Ditches Market Currency

When has increasing credit access made something cheaper? Never, as far as I can tell. Whenever the government says it wants to make something affordable, prepare for a surge in prices.

The rental market in China is no different.

Back in June Chinese media covered Beijing's latest solution to the housing bubble and soaring home prices: mortgages for renters. See: The Final Stage: China Copies U.S. Housing Bubble Policies. Banks planned to lend at sub-market rates to encourage rentals.

Fast forward two months. Central Planning Goes Haywire: Beijing Rents Soaring Turns out government targeting of rental properties caused real estate firms to pile in and renovate existing properties, hiking up rents in the process. Also see: Central Planning 101: Blood-Sucking Realtors! The Rent Is Too Damn High!

No worries though! Banks are here to make housing and rent even more affordable with more loans for rent!

Caijing: 多家银行进军住房租赁市场
In recent years, the state has launched a number of initiatives to vigorously promote the development of the housing rental market in order to promote the “rental purchase and purchase” of the housing market in China. According to a report released by the Chain Institute, by 2025, the size of China's housing leasing market (total rent) will jump to 3 trillion yuan.

Faced with a broad market, since last year, many Internet organizations and many well-known real estate companies have entered the housing rental market. However, among the new market participants, the “Banking System” is very eye-catching.

Mr. Gu, who works in Guangzhou, has been renting for 1 year in Suide Road, Baiyun District. Since the move last year, the price of renting houses has been rising, and the house rented by Mr. Gu has been locked for three years. “One year ago, I signed a long-term lease agreement of RMB 48,000 with the owner through the platform launched by CCB, and paid a one-time rent for three years, and the rent enjoyed a 5% discount.”

It is good to be able to lock in rents, but the three-year rent is also a small expense. However, Mr. Gu is not worried. “I borrowed 75,000 yuan from CCB. The monthly repayment pressure is not large. After the preferential rent and loan interest are offset, it saves more than 1,500 yuan.”
Banks make money coming and going because they're also leasing the property from the owners:
In April of this year, Ms. He, a citizen of Guangzhou, “saves” 120 square meters of unused housing to CCB. The lease period is 6 years and the rent is 500,000 yuan. "Compared with the rental price, I value the safety of the bank. I have to rent for 6 years at a time. I don't have to worry about issues such as follow-up management."

“The services of some housing leasing agencies are gradually alienating, and the use of rent maturity mismatches to form a 'fund pool' has brought hidden dangers to the long-term rental market.” An intermediary said that banks entering the leasing industry can allow “markets to return to the market”. , financial return to finance." Financial affairs can be done by more professional institutions, and intermediaries can become more pure.
But not everyone is down with the plan. The officials in Wuhan are warning residents against long-term contracts because developers might use them to disguise property sales...because 20 years of rent is effectively a 20-year mortgage.

Caijing: 武汉:租赁住房单次租期不超20年 不得一次性收取5年以上租金
According to the regulations, in the future, all new rental housing units in Wuhan should be used for leasing. They should not be sold on a rent basis. The single lease period for external leases must not exceed 20 years, and no one should pay more than 5 years of rent at one time. Other ways to sell in disguise.

The regulations also pointed out that the development and construction units should strictly follow the land transfer contract agreement and the project design documents to fully construct the leased housing to ensure that the construction progress of the new (matching) construction of the leased housing does not lag behind the other commercial houses on the plot for sale; in principle, new ( The allocation of rental housing should be relatively concentrated, according to the layout of the building.

At the same time, in the first phase of the commercial housing project to be developed in phases, it is necessary to ensure that the new (allocated) leased housing and the corresponding supporting infrastructure and public facilities will be started simultaneously and delivered simultaneously; the newly built and leased housing will be small and medium-sized ( If the commercial housing development project obtained through bidding and auction is approved to be converted into rental housing, it shall not be transferred within 10 years.
State-owned banks in Guangzhou are doing what Wuhan's government warns against.

All of China's central planning points in one direction: yuan depreciation. And with yuan bears growing in number, it's no wonder the central bank threw yuan internationalization under the bus.

Bloomberg: China Signals Tougher Yuan Management at Expense of Market Role
China signaled tougher management of the yuan, dropping a phrase underlining the importance of market forces from a key policy report for the first time in five years.

The People’s Bank of China cut its pledge to allow "market supply and demand to play a bigger role in deciding the exchange rate" from a section on future tasks in its third-quarter monetary report. The last time that phrase wasn’t used was in the fall of 2013. Policy makers will take steps to ensure the yuan is basically stable at reasonable and balanced levels, according to the report published late Friday.
All this will do is exacerbate outflow pressures, domestic inflation and economic distortions. The wheels are coming off.


China Welcomes Stock Manipulators in Bid to Boost Liquidity, Australia Fraudulent Lending

Chinese ADRs were pummeled on Friday and one stock in particular, Bitauto (BITA) collapsed right to its major support level. It is a trifecta of trouble: China, Internet and autos.

An article at CNstock discusses how the 5G sector, hit by a "Black Swan," has led the market rebound. 饱受“黑天鹅”事件困扰的板块,缘何成了反弹领先者? Everything looks like a bear market bounce to me.

On the mainland exchanges, "hot money" is returning to the market because Chinese regulators said they would intervene less in the markets. The dearth of trading has caused the shift in focus. According to one report, traders suspected of manipulation are no longer receiving warnings for their suspicious trading activity.

CNStock: 游资努力重返市场!操盘一周,他们有话要说……
"Before this, our group died in silence, no one spoke, and on the day the news was released, our group blew up. There was more discussion in one day than in the previous year." Mr. W said to the reporter.

In the past week, the hot money has struggled to return to the market, despite “demon stocks” made them feel pressure, their existence also provided valuable liquidity to the market.

On October 30, the official website of the China Securities Regulatory Commission issued a statement during the trading hours, indicating that it will optimize transaction supervision and enhance market liquidity.

This news generated a strong response within the hot money community. For this sudden and unexpected news, the long-lost group of hot money in the past week, first of all, will be suspicious, and then gradually dispelled doubts, more and more people try to test.

The hot money has always been adhering to the short and fast style. When the news was first seen, Mr. W entered the trading. In fact, Mr. W has been away for more than two years. In mid-October this year, he was told by the broker that his account had been removed from the blacklist.

There were three transactions this week. I still received the supervision letter for the first time, but I did not receive window guidance or supervision letter the next two times. The trading environment is indeed picking up.” Mr. W’s feelings also led to other active funds around him.

A number of active investors focused on short-term trading said that through a week of operations, they found that the verbal instructions and warning letters received were indeed decreasing.
Alhambra: Why Chinese Authorities Are Freaking Out
The economic stats all keep pointing in this direction. China’s economy isn’t right now collapsing but that isn’t the problem. Again, what the numbers suggest is we’ve seen the best there is and it isn’t (ever) going to get any better. And it isn’t near enough growth.

There just isn’t sufficient economic momentum anywhere in the world to overcome eurodollar tightening. In fact, the two go hand in hand; lack of momentum leads to monetary caution, spurning further growth creating more monetary tightening. The result is growing desperation in China, as elsewhere, about where things might be going just on the other side of the horizon.
A credit-driven decline in Chinese economic activity followed by the rapid or large one-off depreciation of the yuan still looks likely to me. It may be that as in 2016, central bankers and politicians intervene, but there's no more than one save left because the U.S. markets are peaking. If there's a rebound in the U.S., it will unfold similar to the final melt-up phase of the dotcom bubble in 1999. It will take another leg down in the markets to change central bank policies though. The major indexes will officially enter bear market territory as the Nasdaq did in 1998 when it fell 30 percent.

Australia strikes me as a good candidate for China fallout. Recently, China's government told banks to lend to small businesses and not call in loans early. Australia's Treasurer just did the same. (H/T to Macrobusiness.) AFR: Josh Frydenberg tells banks to ease up on lending crackdown
"I would encourage the banks when it comes to lending, in particular for small business, make sure you get the balance right, keep the books open and don't lose sight of the broader public good," he said.

"We all know the royal commission has brought into focus the issues of responsible lending and examples of misconduct. While both issues are important, I do see them to some extent as separate, with different responses required."

The tightening of credit has taken its toll not just on investors but owner-occupiers with housing loans falling sharply in September, according to the latest housing finance figures from ABS.
Macrobusiness has a more detailed look at the topic, though it may go behind the paywall.

China remains in focus because of its size and because the markets haven't priced in a yuan devaluation. It will be a called a "Black Swan" by the same folks who thought 2008 was a surprise. Aside from a breakup/crisis in the euro, my top bear market recognition event is substantial yuan depreciation, but that doesn't mean it will make for the best short candidates in terms of total decline.

My read of the China charts: the downturn that started in June hasn't broken yet. Tactically, I'm not going to short if there are sustained rallies, but the risk/reward remains in favor of the bears heading into this week.


No Lending Coming

I didn't jump to conclusions on Friday, but my gut reading was correct. Small business has rhetorical support from government, but no concrete measures. The banks will not follow through on lending, not enough to make a big difference.

Friday: China Compels Banks to Lend to Small Business, Bank Stocks Tank

Saturday: It's a guideline, not a rule.

CNStock: 监管人士:“一二五”是方向性目标,信贷标准没放松
 The “one-two-five” goal of private enterprise loans has caused widespread market debate. The Shanghai Securities News reporter learned from the supervisors that “one two two five” is not a hard assessment indicator, and the credit standard has not been relaxed.

  Experts in the industry analyzed that in the long run, supporting private enterprises with good services, and the bank's own stable development, prevention and control risks, the goal is consistent.

  After combing, there are probably three misunderstandings in the market for “one two two five”. After communicating with banking industry insiders and regulators, the reporter will help you to remove these misunderstandings and correctly understand “one two five”


Federal Reserve Increased Balance Sheet Last Week

The Fed increased its balance sheet by $2.2 billion in the week ended November 7. Stocks enjoyed a strong rally. The S&P 500 Index rose 102 points. The Fed now has to reduce $52.2 billion this month, assuming they don't make up the smaller reduction in October, in which case the reduction could go as high as $68 billion.

China Compels Banks to Lend to Small Business, Bank Stocks Tank

Reuters: China unveils more funding support for private firms
“The next step is to increase support for private and small enterprises, so that state-owned enterprises, private enterprises and other enterprises will be treated equally,” state radio quoted the cabinet saying, at a regular meeting.

China’s major commercial banks should lower their average lending rate in the fourth quarter by 1 percentage point for small firms from the first quarter, it was quoted as saying.

China will crack down on banks’ abrupt withdrawal of loans from small firms, which will be encouraged to tap bond and equity financing, state radio said.

Loans for small firms with a credit line of 10 million yuan ($1.44 million) or less will be included in collateral for the central bank’s medium-term lending facility (MLF), it said. Previously, the upper limit was 5 million yuan.
The government is forcing large state-owned banks to bear the cost of this program and shares fell yesterday, some as much as 4 percent. Leaving aside the forced interest rate cut (assuming banks follow through), banks haven't been lending to smaller companies because they fear the risk. Thus while it is a good step forward in one sense, it is another example of heavy handed central planners dealing with an economy distorted by their own policies.


Yuan Defense Costs: Reserves Fall $34 Billion in October

China's forex reserves declined $34 billion in October, the largest decline since December 2016. Reserves in SDRs declined $35 billion. Reserves fell the $3.053 trillion.

Breaking USDCNY 7 will also break $3 trillion in reserves. Quickly thereafter, reserves will be below $2.9 trillion and the cost of defending the yuan will start rising rapidly along with depreciation expectations. Markets are whistling past a global financial panic.


Midterm Wrap

The big surprise of the 2018 midterm was the pollsters: they actually had it right this year. They also had it right in 2016 if you considered the margin of error, but in midterms they historically were off by 2 to 3 percent. This year, they were correct and the final vote swung in favor of Democrats. As I noted in my simple model, the only way Democrats could take the House was with a wave election and they got it. I expected the final result would narrow from the polling data, but it widened.

The quick takeaways.

1. U.S. equities typically rally after midterm elections no matter the outcome. This time looks no different.

2. The U.S. dollar weakened, but it was already pulling back. Looks like an acceleration of the consolidation.

3. This is the first divided government since 2010 to 2014. If Congress goes the route of impeachment then the 2020 election starts today. Otherwise, there could be deals on immigration, spending and possibly healthcare. The ACA is still a disaster.

4. Several Republican states expanded Medicare. The U.S. fiscal position is deteriorating. There is no constituency for cutting spending.

5. Texas almost went blue. Demographics will turn Texas blue by the middle/late 2020s, after which time Republicans as you knew them before 2016 will be unable to win presidential elections without resorting to Trumpian populism. Unless Democrats pick really bad candidates. But by the 2030s, Democrats can probably run bad candidates and win Texas.

6. Florida could turn reliably blue in 2020 because of demographic change, but also a referendum past last night that allows 1 million ex-felons to vote will accelerate the shift. Again, candidates matter in the nearer-term, but in the longer-term, demographics will shift both parties in the direction of identity politics, socialism and populism.


No Liquidity Flood This Time, For Now

Bloomberg: China Signals More Stimulus Measures Planned
China’s leadership signaled that further stimulus measures are being planned, as disappointing economic data showed that the current piecemeal approach isn’t working.

The nation’s economic situation is changing, downward pressure is increasing, and the government needs to take timely steps to counter this, according to a statement from a Politburo meeting Wednesday chaired by President Xi Jinping.
Reuters: China to push for tax cuts, avoid competitive currency devaluation
China will push for larger tax cuts, Premier Li Keqiang said on Tuesday, adding that it would help small firms facing funding difficulties and widen access for private firms in infrastructure.

China will not resort to competitive currency devaluation and is able to keep its yuan currency basically stable, Li added, reiterating that it would not resort to forceful stimulus to prop up the economy.
To bang on the drum again, I've never argued China will devalue for competitive reasons or because of a trade war. I do think a trade war could squeeze the dollar supply and create increased pressure on the yuan, but I have and still expect currency depreciation because of past inflation. For the same reason I expect U.S. dollars will be much cheaper (eventually). Markets eventually balance. A nation that drives up asset prices with inflation reaches a fork in the road where it must choose currency destruction or crippling (in the short term) asset price deflation. I have seen no indication China will opt for a 30 percent decline in home prices nationwide.

iFeng: 李克强:将保持经济政策的连续性,不会搞“大水漫灌”
Li Keqiang pointed out that we have discussed in depth the Chinese economy and reform and opening up. China's economy and the world economy are deeply integrated. At present, we are experiencing certain downward pressures while operating smoothly. However, we have many policy tools and control measures to overcome difficulties. We have a huge market and abundant human resources, which can keep the economy long-term. We will maintain the continuity of economic policies, will not engage in "big floods", will not rely solely on investment and exports, but will continue to implement a proactive fiscal policy and a prudent monetary policy to strengthen directional regulation and camera regulation . Vigorously promote simple administration, reduce taxes, reduce fees, and take more effective measures to resolve the problem of financing difficulties and financing for private enterprises and small and micro enterprises . We will relax market access for the private economy, increase the opening up of the service industry and the financial industry, and create a fair business environment for state-owned enterprises, private enterprises, and foreign companies, and further promote the market activity and social creativity.   
Caixin: Why China Says It Won't Flood the Economy (Again)
Late in 2008, in the middle of the global financial crisis, China decided to unleash a 4 trillion yuan ($586 billion) wave of stimulus, mainly through infrastructure investment. After plummeting in 2008, China’s economic growth rate only slipped slightly in 2009 and accelerated in 2010 (see chart below).

But this rush of extra liquidity, largely provided via bank loans, left stagnant puddles in its wake as corporate debts swelled and financial risks proliferated. Ten years later, the current crackdown on excessive leverage, overcapacity and shadow banking is still in part trying to deal with its lingering after-effects.

China’s leadership, fond of agricultural metaphors, have called such massive stimulus “flood irrigation” (大水漫灌 dà shuǐ màn guàn), an ancient and inefficient method of irrigating crops by simply releasing water over the ground’s surface. Water can pool where it is not needed, and much is just lost via evaporation.
The conclusion:
China’s latest quarterly growth figures, for July to September 2018, were the weakest since the first quarter of 2009. Although officials continue to stress that their tactics are different now, the suspicion remains that the government might just release the floodwaters again. After all, it worked last time.
Let's look at the chart: it worked one time. Now they have to flood the economy to keep the growth rate from collapsing. To restart growth they need to actually deleverage. Allowing asset deflation and debt defaults is the best way, the more politically palatable way is to deleverage via inflation.
Let this chart sink in. They have flooded the economy with credit over the past 10 years and only when they did a government stimulus equivalent of 13 percent of GDP (on top of private market credit growth) in 2009 did it produce a rise in growth. Since then they've seen total credit growth north of 20 percent in some years and it keeps the economy from slowing more. China has turned Japanese. The difference is Japan "turned Japanese" during the 1990s and 2000s when a booming technology sector, followed by U.S. housing bubble and China growth, powered the world economy. China can't float by on global growth because it is the marginal producer of global economic growth.


Fed Reduced Balance Sheet $33.3 B, 0.8pc Last Week

The Fed reduced its balance sheet $33.3 billion last week, $23.8 billion was treasuries. It was the biggest single-week reduction to date, worth 0.80 percent of the Fed's balance sheet. The Fed is $16 billion off pace after October didn't have enough treasuries. In November, $59.2 billion of treasuries mature. If the Fed wants it can play catch-up and reduce $66 billion. Otherwise, it should reduce $50 billion as expected. November 15 and 30 both have substantial treasury maturities so there won't be a full month of reduction stuffed into one week.

The S&P 500 Index gained 12 points on the week.