Good morning. Big Tech earnings kick off today, with Alphabet and Tesla reporting after the bell. It’s a sensitive moment: the Magnificent 7 tech stocks and the semiconductor indices have been stuck in a jagged sideways pattern for two months. We expect another quarter of strong results, but high expectations make market reaction hard to guess.

Government committees rarely give clear answers, but the balance sheet task force set up by new Fed chair Kevin Warsh could be an exception. Its three leaders—former Reserve Bank of India governor Raghuram Rajan, Harvard economist Jeremy Stein, and Harvard’s Karen Dynan—have well‑known views on the topic. They will weigh the “costs, benefits and institutional implications” of the Fed’s $6.7tn balance sheet.

The balance sheet is a remnant of emergency quantitative easing, and even after the Fed let more than $2tn of bonds mature and roll off between 2022 and 2025 it remains 60 per cent larger than before Covid‑19 and seven times larger than before the great financial crisis. Each round of QE leaves the balance sheet permanently larger because banks become dependent on central‑bank liquidity.

Rajan argues that QE’s debt drag is a real limit on how fast the balance sheet can shrink, while Stein contends that a large balance sheet brings financial stability and that the main issue is the maturity of the holdings, not their nominal size. Warsh will likely side with the view that holding long‑duration assets mush no longer warranted once conditions normalize.