A few days ago, I read a premium article over ZeroHedge, which went into great detail as to why the three components of what I call the Fed Spread – – most notably, the balance sheet – – render all the Q.T. the Fed is doing moot. In other words, by their arguments, the market was going to roar higher this year anyway. I confess, I felt pretty empty-headed reading the article because it didn’t sink in, although it was enough to strike fear into this bear’s heart.
I was reminded of this just now since it looks like our prediction of near-term S&P prices increased. It’s still beneath present price levels, but the gap is getting smaller. Here are the three individual elements:
![REPO Rate Chart REPO Rate Chart](https://d1-invdn-com.investing.com/content/picfbca10a7fc694eb5d37d39455d8c02f7.jpg)
![Total Assets Chart Total Assets Chart](https://d1-invdn-com.investing.com/content/picfdff4637056d89687c5b67ed20ecabbc.jpg)
![Liabilities and Capital Chart Liabilities and Capital Chart](https://d1-invdn-com.investing.com/content/pic421484da237f80e58bb86d9f27f24f0d.jpg)
Once they’ve been through the food processor, we can see the two-week target for the is 3846, which isn’t exactly exciting.
![FR_WALCL Chart FR_WALCL Chart](https://d1-invdn-com.investing.com/content/pic80b87829695e7f395263c2d33bf21656.jpg)
The red shows the spread, which is still reasonably meaty.
![FR_WALCL Price Chart FR_WALCL Price Chart](https://d1-invdn-com.investing.com/content/pic43265d5d0ceb5f9e163d41abb854853a.jpg)
The next Fed meeting (which will be its first of 2023) is only nine trading days away, and between now and then, there are hundreds of high-profile earnings reports. There should be plenty of rough seas ahead.