Citi | News. The Rise and (Eventual) Fall in the Fed's Balance Sheet. The Regional Economist | January 2014 By Lowell R. Ricketts and Christopher J. Waller In response to the Great Recession, the Federal Open Market Committee (FOMC) approved several unconventional monetary policies intended to foster a more robust economic recovery. Of these policies, large-scale asset purchases (LSAPs), popularly known as "quantitative easing" or QE, led to the largest expansion of the Fed balance sheet since World War II. The FOMC has stipulated that the expansion of the Fed balance sheet is a temporary policy stance and that holdings will return to normal as the recovery progresses.
Inflation pressures resulting from this expansion have been trivial thus far. The Fed's Balance Sheet Policies The first round of LSAPs (QE1) began in March 2009 and ended one year later. During the summer of 2010, fears mounted that the U.S. economy could fall into a deflationary outcome similar to that experienced by Japan. Following QE2, the risks of deflation and recession subsided. Soros makes a huge bet against stocks. Soros Fund Management has doubled up a bet that the Standard & Poor's 500 Index ($INX -0.81%) is headed for a fall. Within Friday's 13F filings news was the revelation that the firm, founded by legendary investor George Soros (pictured), increased a put position on the S&P 500 ETF (SPY -0.82%) by a whopping 154 percent in the fourth quarter, compared with the third.
A put or short position basically gives the owner the right to sell a security at a set price for a limited time, and in making such a bet, an investor generally believes the security is going to decline. The value of that holding, the biggest position in the fund, has risen to $1.3 billion from around $470 million. It now makes up a 11.13 percent chunk of all reported holdings. It had been cut to 5.14 percent in the third quarter, from 13.54 percent in the second quarter, which itself marked another dramatic lift on the bearish call. Soros and his hedge fund aren't alone if they're feeling unease at the bull run for markets. Untitled. Untitled. Investments. Diversification does not guarantee a profit or protect against loss. Investments in annuities are not FDIC insured or bank-guaranteed and may lose value.
Guarantees offered in fixed annuities are subject to the claims paying ability of the issuing insurance company. Variable annuities are sold through PFS investments Inc. and are subject to market risk, including the possible loss of principal. Variable annuities are sold by prospectus only. All investments are subject to risk, including the loss of principal.
It is important to remember that there are risks inherent in any investment and that there is no assurance that any money manager, mutual fund, asset class, style, or index will provide positive performance over time. Prospectuses for variable products issued by a MetLife insurance company, and for the investment portfolios offered thereunder, are available from your Registered Representative. PFS Investments Inc. is a subsidiary of Primerica, Inc.. PFS Investments Inc. FACT SHEET: Opportunity for All: Securing a Dignified Retirement for All Americans.