The Macro Minute with Darius Dale Will the Fed sacrifice Main Street to save Wall Street (again)?
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Dec 9, 2025 The central question revolves around whether the Fed will prioritize Wall Street over Main Street. Darius examines the impact on liquidity and volatility ahead of the Fed meeting. He discusses signals from options markets indicating significant market moves. Focus shifts to the Fed's balance sheet and potential repo market stresses that could disrupt liquidity. With political pressures and a tight money market, the outlook remains choppy. Finally, systematic risk tools are highlighted for efficiently managing portfolio exposure amid these uncertainties.
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Fed's Tradeoff: Wall Street Versus Main Street
- The Fed meeting centers on whether it will prioritize Wall Street liquidity over Main Street affordability.
- Darius Dale flags rising political cover for hawks amid media focus on the affordability crisis.
Balance Sheet Ahead Of Rate Guidance
- The Fed's balance sheet, not just the policy rate, is the critical variable for markets.
- Halted QT and unclear runoff plans raise risks of reserve shortages and recurring repo stress.
Seasonal Reserve Scarcity Drives Repo Stress
- Systemic reserve scarcity shows up seasonally around quarter-, year-, and month-ends and can trigger market dislocations.
- October's repo pullback illustrates how banks hoard cash ahead of regulatory and tax cut-offs.