Looking out at the road rushing under my wheels
Looking back at the years gone by like so many summer fields
In sixty-five I was seventeen and running up one-on-one
I don't know where I'm running now, I'm just running on
Running on-running on empty
Running on-running blind
Running on-running into the sun
But I'm running behind
Jackson Browne- Running On Empty
The markets have had their post-Fed wipe down and ignited the usual apoplectic drive by macro ranting. As we noted on Tuesday, "the easy choice" didn't really exist for the Fed and extending Twist. At 6 months and considerable size, The Fed will be running on empty inside of 2016 when the Twisting stops. The market showed its attachment to the flow aspect of Fed policies as Bernanke and Co. again promoted the stock characteristic. The negative money multiplier should be a hot topic in the Hamptons this summer.
The empty short end tank at the Fed means more weight on the street. Repo rates and general collateral will continue to simmer at the core of the gambit. Surprisingly, NO financial journalist in the presser asked the Chairman about his empty short end inventory. Twist not only extends duration, it extends the imagined exit date. The deceit at the FOMC is predictions remain in the late 2014 period leaning slightly to 2015. The Fed will be shooting with puffs of air. We have always compared the Bond to Pam Anderson- over sized, chaotic, sloppy and slightly diseased..yet still garnering all the attention in the room. Avert your eyes, watch the front.