The Fed has activated Quantitive Easing via their discount lending window for banks. Which now stands at $152 billion in less than a week, swelling the Fed's balance sheet to just under $300 Billion. The Fed is attempting to play both sides of the coin with QE and rate increases. Which may lead to further distortion in safe havens flows and bond markets.

Chart 1

Chart 2

The Federal Reserve has begun money printing within an inflation economy, which is astounding, but not surprising.   As discussed in the post was the possibility of a rev up of silent QE (Quantitive Easing) programs, that are not as blatant to the market, but are still obvious in their mandate of feeding liquidity into the financial sector,  which they have begun.  And since the Silcom Valley Bank fiasco on the 10th March , that in all retrospect may not have lead to a bank run by the general public, but rather a run on the banks by other banks.  The bailout of the financial sector, by tapping the Fed's discount window now stands at a phenomenal $152 billion, thus this has added to the Fed's balance sheet, as discussed here, at close to $300 Billion spike (in one week).  Its weekly statement is at 8,369,300 from 3,423,283.  And it can be said that Quantitive Tightening is nowhere to be seen.  Please refer to Chart 1.

So, stock markets are relatively well supported, with excess liquidity of that $150 billion showing up in the 'relief' rally with Bitcoin an Crypto, which, as discussed is also an underwrite of the Crypto markets.   Which can also be said, that the volatility with Crypto and the crony way that the Cyrpto exchanges such as Coinbase and Binace have run and 'cooked' their books, not to mention the criminality of FTX, is supported by Wall Street's investment banks.  That have billions invested into the crypto markets.

The commercial bank First Republic, was bailed out by a consortium of investment and commercial banks at at the tune of $30 Billion, to plug a reported hole in the failing bank of $28 Billion; that have everything to do with their toxic bond and collateralized debt holdings.   The deal was underwritten by the U.S. Treasury.

And these questions have to be asked.  How far are these bailouts going to continue?  If there is an ad Infinium  of unloading of toxic assets onto the Fed's balance sheet and U.S. government (as an underwriter).   Can the Fed play both sides of the coin?  By printing money and tightening with interest rates.

No, it can't.  And this rewriting their Central Bank mandate on a month-to-month basis is shifting risk back and forth under a inflationary economy simply does not make sense.   Something has to give.

Chart 2 shows the S&P 500, M2 money supply, Fed's March 2 balance sheet at over 8 Trillion and interest rates.  The red horizontal lines are the price supports showing the 2022 Fed puts at 3978 and 4000.  As you can see, the S&P remains supported in these ranges, and rather than reacting to selling pressure on higher rates, the offset is clearly the elevated money supply and Fed' balance sheet, with soon-to-be added $300 Billion.