The end game is unstoppable in our view and approaching fast. The Fed is between a rock and a hard place. It has been printing money like it's the depth of the Global Financial Crisis while stocks and corporate credit are flying high reflecting a dangerous combination. The panic stimulus at this point in the business cycle is completely understandable, but it is only hastening the unwind of the imbalances the central bank has created and been impossibly trying to maintain. The idea that money printing is an insurance policy that does not come with a cost is simply wrong.

The Fed is in fight-or-flight mode because there are very real credit bottlenecks in the plumbing of the banking system that have created a US Treasury funding emergency. The central bank has been forced to add $364 billion of Treasury securities to its balance sheet over last four months and has committed to another $471 billion though mid-January. The money printing was necessary to fight a repo market funding shortage that warns of a systemic financial crisis in the making. Usually when the repo alarm bell flashes, it's too late. Because of the Fed's swift action, mayhem was averted but likely only in the very short-term. Major imbalances remain. One huge problem is that investors at large do not even know what a repo crisis means, so they have been interpreting the cash injections as a reason to go all in on risky assets. The bullish investor sentiment and positioning among investors last week reached the highest levels we have ever seen. Such ebullience in the past has been associated with major stock market tops. Today, we have structural imbalances and catalysts to make that a highly likely scenario, potentially even as we head into year end.