Is the Fed secretly printing? What will the week bring?

Last week, the markets were buoyed by Nvidia's quarterly results, which supported the stock market bulls in pushing the S&P 500 index to new historic highs. New records also appeared in Europe, where, despite weaker data from the German economy, DAX continues to grow. A quiet start to the week allows us to take a closer look at American activities Federal Reserve.

Is the Fed secretly printing?

Since the end of 2022, despite the Fed's official Quantitative Tightening (QT) program, we have been observing a slow increase in the monetary base in the United States. For many, this fact is proof that the Fed is secretly printing, thereby stimulating stock market growth. However, if we take a closer look at the Fed's balance sheet, we will see that its total is declining. The exception is March 2023, when as a result of the regional bank crisis, the Fed released a large amount of liquidity into the market. At the same time, Fed reserves are growing - mainly because QT is collecting huge excess liquidity "parked" in reverse repo operations.

What would happen if the Fed actually ran a hidden printing? The market reaction would certainly be optimistic, and the bull market on the American stock market would intensify. This one is being saved - at least for now - by Nvidia, whose very strong results and optimistic revenue forecasts for the next quarter were supported by stock market bulls. Currently, the company's valuation indicators are becoming less and less important, but the question is whether the market will be saturated with graphics systems sold by Nvidia. However, if AI revolution will continue, and the need for faster and faster systems will grow - the valuation of Nvidia shares should also increase.

In today's webinar:

• Is the Fed secretly printing?
• What's next for Nvidia shares?
• Problems in Germany?

About the host

Dr Przemysław Kwiecień - Chief economist X-Trade Brokers. Doctor of Economics at the University of Warsaw, graduate of the University of Warsaw and London Metropolitan University (MSc). Holder of the prestigious CFA certificate. He has been working for XTB since 2007, previously he gained experience as an advisor to the Minister of Finance, Mirosław Gronicki, and an economist at Bank Millennium. At XTB, he manages the Analysis Department.

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