Central Bank's Balance Sheets- Aug 2008 thru Oct 2014

The US Federal Reserve has decided to conclude its Asset Purchase Program (QE), once as high as $85B per month. Over the course of the US Fed's multiple easing programs, its Balance Sheet has grown on a percentage basis much more than any other major Central Bank. Currently, only the Bank of England comes close to the Fed's Balance Sheet expansion, with the Swiss next in line, but only acting defensively to prevent the Franc from appreciation beyond limits, keeping Swiss Industry globally competitive- Courtesy: @axelmerk

One Year Central Banks Balance Sheets Change vs. Currency X-Rate Change: Impotent Correlation On Weak-Inverse-Relationship

Central Banks Balance Sheets- BOJ, Fed, BOE, ECB (courtesy of @AxelMerk)
Currencies denominated in US Dollars- Euro, Pound, Yen:

The weak-inverse-relationship might partially be accounted for by the US Fed paying 0.25% to Federal Reserve banks to hold Reserves, thereby keeping this portion of the Monetary Base out of M2.

US Labor Department December Report / US Federal Reserve Taper

Today, US Non-Farm Payrolls reported a paltry 74K increase in December, short of the 200K jobs economist consensus had expected. Unemployment fell to 6.7%, but the U6 Total Unemployment was unchanged above a troubling 13%. The Civilian Labor Force Participation fell to a disturbingly low 62.8%:

The very low Civilian Labor Force Participation Rate has not been this low since 1978, which may be a significant factor in the US Federal Reserve's Taper decisions, overshadowing the improved but somewhat deceptive Unemployment Rate improvement. I expect the Fed's next move will be to maintain its bond buying program at $75B or reduce it by only a modest $10B (consistent with last move):

US Federal Reserve Taper / US Labor Department November Report

Post-Recession Unemployment has improved 3%, while Employment is down a concerning 3%, a significant factor in the US Fed's decision to only modestly taper its Asset Purchase Program by $10B per month:

Central Bank's Balance Sheets- Aug 2008 thru Aug 2013

Today, the US Federal Reserve decided to very modestly taper the size of its Asset Purchase Program from $85B to $75B per month, starting Jan 2014. On the below chart, the slope of the US Fed Balance Sheet growth line will barely change. Currently, only the Bank of England has added more to its Assets (on a % basis) than the US Fed, since Aug 2008, and the Swiss have only acted defensively in growing its balance sheet to prevent the Franc from appreciation beyond limits targeted to keep Swiss Industry globally competitive-

Courtesy of: merkinvestments.com/newsletter