Fed’s Williams Wants to Shrink Balance Sheet by $2.5 Trillion

It’s Friday, so don’t expect anyone to pay attention to the Fed comments made today. But they’re off their fucking rocker again — discussing the specter of raising rates AND reducing the balance sheet — at the same time. If you’re a student of history, like myself, you’d know that any time the money supply was fucked with and greatly reduced, subsequent crashes ensured.

Well, what do you think will happen to stocks if the Fed reduced their balance sheet by $2.5 trillion and hiked rates to boot?

Here are the lowlights.

Via Briefing.com

Fed’s Williams says wage growth has been stubborn; Would like to see jobs growth get to 180K; Believes April data showed that Q1 was an aberration

Fed’s Bullard says it is odd that Fed is raising short term rates and not shrinking its balance sheet; Fed’s Rosengren says that Fed will hit zero rates and could also theoretically expand the balance sheet in future recessions

Fed’s Wiliams sees U.S. at full employment, maybe a little beyond; Fed’s Bullard says could shrink the balance sheet to as low as $2 trill

Fed’s Williams says makes sense to unwind balance sheet later this year; Fed’s Evans says balance sheet is very large and needs to shrink

Fed Chair Yellen does not address monetary policy or economic outlook in prepared remarks; Remarks center around gender pay inequality

Fed’s Williams says Mortgage and Treasury bonds to eventually roll off, not worried it would hurt GSEs

Fed’s Williams says Fed should consider adopting inflation price-level targeting; New frame work implies lower for longer rates

Fed’s Bullard (Non-Voter) says current Fed rate reasonable; would not oppose one more rate hike this year; Has delayed trimming the balance sheet for too long, wants to start trimming in 2H17

Fed’ Fischer prepared comments focused mainly on Fed need to avoid a simple rule (meaning the Taylor Rule often discussed for managing rates); No comments on the economy or monetary policy at the moment