The markets were wobbling again this week, but regardless, the Fed normalization will hit $30 billion per month in April. I must confess that I get a good laugh when I hear market apologists and real estate pundits talk up the magnificent economy and housing market we are blessed with in Texas. Yes, things are pretty good here in the Lone Star State, and the DFW housing market still seems to have legs. Unfortunately the real economy is not nearly as robust as many talking heads and sell-side practitioners would have you believe.

The March employment report was another reminder that all is not well in the magical fiction we are calling the United States economy. I have been writing about these pillars of sand for several years, but as many of us know, truth has taken a back seat to euphoria and profits following the last recession. Apparently Americans have much shorter memories than I could have imagined.

As the market continues to wobble with the Fed pulling a measly $20 billion per month from the punch bowl of central bank stimulus, it is worth remembering that the Fed’s “normalization” jumps to $30 billion per month in April. That means another $30 billion of the “cocaine and heroin” that the Fed injected into the markets will roll off in the form of those Treasury and mortgage-backed-securities holdings.

While grandma Yellen is busy cashing in on her stint as Wall Street’s BFF, average Americans are a little over-leveraged it would seem. Earlier this morning I was writing about how average new home prices were already softening here in the DFW area, but things could get a little more challenging as the Fed ramps up that balance sheet reduction to an anticipated $50 billion per month by the end of 2018. Let’s just say things could become a little more turbulent. Contrary to Jerome Powell’s ridiculous assertion that growth has “picked up”, the economy is still being levitated by a sea of international central bank liquidity.

This week the rate on a 30-year fixed rate mortgage cooled to 4.4 percent. Despite the cries of many real estate industry “experts” calling for a continued rise in rates, things have not turned out quite as planned. Apparently those tax cuts passed by Congress were all used up on corporate buybacks and executive bonuses. Who could have imagined! I’m not surprised at the recent stagnation because the hard data shows that the U.S. economy is most definitely NOT firing on all cylinders. We’re a long way from “full employment”, and only a clueless PhD economist at the Fed or Wall Street shill would pretend otherwise.

For now we can sit back and take solace in the fact that the Federal Reserve only has $3.48 TRILLION more to go before we get back to a normal balance sheet. In 2019 and moving forward the Fed is slated to unwind $600 billion per year until the balance sheet is deemed “normal” or the wheels fall off the U.S. economy, whichever comes first. It will be interesting to see if we can even make it through 2019 before the Fed blinks. I don’t think the Fed would hesitate to alter it’s balance sheet normalization if it were apparent the markets were coming unraveled at the seams. If we have learned anything from the past 10 years, it is the undeniable fact that the Federal Reserve establishment serves the interests of the banking sector and Wall Street above all else.

There is still over $2.1 trillion in excess reserves sitting in Fed banks, much of it held by foreign banks. As the Fed raises rates, these banks are earning more free money to sit on their ass and not lend that money while the interest Americans are paying on the spiraling national debt shoots higher. It’s a comical scenario that only a banker could love.

“A man dies when he refuses to stand up for that which is right. A man dies when he refuses to stand up for justice. A man dies when he refuses to take a stand for that which is true.” Martin Luther King