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$4.1 Billion POMO Closes, Consisting Of 86% In 2009 Issues, Market Ramps Like Clockwork
Today's POMO was announced at 10:15 am, roughly around the time the market started moving higher, closing at 11 am, in which $4.050 billion of mostly 5 Year notes were repurchased. The bulk, or 86% of these notes, were 5 Year notes issued in 2009, lead by CUSIPs LC2, KN9, KY5 and KV1.
There is now $10.9 billion left in the government's Liquidity For The Stock Market fund (via Treasuries).
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The "Girls" are partying like 1999....
Can you omit the chick pics so I don't get fire[walle]d?
mule65: please find a new employer. i would prefer to omit the chart pix.
If RobotTrader omits the chick pics, there is no RobotTrader IMHO. Half the fun of RobotTrader is viewing his wonderful library of chic pics. I've actually been around long enough to see some repeats.
Find a new boss.
ZH, can you please omit mule65?
Omit chick pics, have you gone mad????
Robo is a national asset.
You shouldn't be looking at ZH during work anyways as it is a subversive organization dangerous to the current american political and financial structure.
Thank goodness for that!
Can you leave out the pics next time? Jeezus, get a girlfriend.
Once again, good work robot.
Whats up with all of the spikes in vol coupled with sideways movement?
Note that 912828LC2 T 02.625 07/31/14 2,492,000,000 was the note auctioned at 1.92 BTC in July: http://www.treasurydirect.gov/instit/annceresult/press/preanre/2009/R_20...
Nice catch, Anon.
That was the auction that could have wound up being a "failed" one, right?
Mmmmm....tasty Asian Kitten
u had to put kathie lee gifford up there with all those young hotties? :((
Agreed....only thing worse would be a piccture of "Frank."
What is up with Kathie Lee. It ruins the whole mojo, baybee.. :) Too funnt RT
Don't forget AIG's 15% jump this morning; though interestingly that got cut off at 10:14 AM.
I finally got served an easy enough question to become a Zero Hedge member and all I got was this lousy reply.
Stocks will not drop while the dollar drops, period. The downtrend has overpowered everything.
Take a look at a daily chart $DXY. Every $ spike coincides with a drop in the market while every $ plunge coincides with a spike up in equities.
It is the single greatest correlation in the markets today.
What charts?
RobotTrader, get your own blog. Jesus.
Near-bankrupt REITs and derivatives-clogged insurers are running big today...
my mom is upset about the kathie lee gifford. she's gonna dump you if you keep it up.
Terribly obvious. The market was treading water until the POMO announcement. Dollar falls, stocks spike, Nasdaq shoots up after being elevated all day by upgrades and the Dell buyout of Perot Systems.
I wonder if mergers and buyouts can continue to support the market on down days(what few we've had). This was a much bigger chunk of the POMO money in one swoop than I expected.
It would seem the only "support" markets need these days to go up is the opening bell.
Today I finally gave in and played on the long side, a quick, predictable ride.
I feel so horribly dirty...
Couldn't help noticing that AIG ramped like hell before operations began then flattened out while the rest ramped up. Connected somehow?
Only other interesting point is that big name financials generally did not participate.
Little bit of a market drop now...stick save coming in 3...2...1...
The idea is to anesthetize the bears with small glimmers of hope on pullnbask while stocks contine to settle higher in the inexorable ramp to the moon. merely look at the banks. the idea is to present the appearance of pullbacks while resettling the stocks on higher ground.
So the UST buying will end soon, $300B in 7 months.
And in the next 3 months Bernanke will buy $400B of agency MBS.
Which program do you think has the bigger effect on the market?
This is a damned charade. This simply funnels handling fees into the primary dealers.
The fed should simply take delivery of the treasuries and cut out the middleman.
This is goofy.
No, that would be against the law. The Fed needs Goldman to serve as an intermediary, and they get well compensated for the honor.
Of course, Goldman provides other valuable services in the HFT arena that make the fees the Fed is paying a decent bang for the (ever declining) buck.
I believe I understand these POMO's correctly, but please correct me if I'm wrong:
1. Treasury needs to raise hundreds of billions for the exponentially growing US deficit/debt
2. They issue these Treasury securities at auction which are supposedly purchased by indirect bidders (foreign central banks) and balance to Primary broker/dealers. The primaries know that if they can't sell them the Fed will repurchase them. This way a failed auction cannot occur
3. Upon repo, which is now just weeks (maybe even days?) later, the Fed gives the Primaries cash in exchange for the unsold Treasury securities which it puts on its balance sheet.
4. This cash goes back into the stock market or at least a lot of it does.
Then the question arises, shouldn't there be a fall in the market on the auction date as Primaries bought the securities from Treasury? They have to pay for them with cash or stock sales or no? I keep hearing about free money from the Fed referring to zero percent interest rates but is the Fed somehow just shoveling cash to the Primaries who don't have to pay it back?
I am guessing that the Fed allows the PDs to write a check on the bonds using the bonds as backing for the check. Rather circular I know. But with the fed allowing treasuries to be counted as reserves, the PD/Banks can write checks against the fractional reserve of the treasuries.
The fed then buys back the treasuries, giving the banks cash that they never had in the first place, plus any fees and interest.
This is just too weird.
Step 3 repo may be exercized within minutes of the auction for all anybody knows. It's the Fed's game and they set the rules.
Add to that an unknown leverage factor and you have a ramp. The problem developing now is that it looks that traders see the clockworks, and are now taking profits at the top of the ramp. Ergo, nobody is fooling anyone anymore.
This is precisely why the Fed must be audited and precisely why it won't be audited.
The "system" will not allow itself to fail or to be exposed. It will attack whoever or whatever attacks it.
This is why Zero Hedge must remains nameless. The keepers of the system need a name, a person, something substantial to attack. A ghost can't by its nature be successfully attacked.
PONZI
Didn't Enron do something like this?
Charles would be proud.
If it ramped this much just on the announcement of the auction taking place, what will happen tomorrow, when the funds are settled (i.e. when the primary dealers get the funds actually deposited in their accounts)? In the past, that was when we saw all those wonderful 2:30 PM rallies, often across the board, but more often in the fab 5 (BAC, C, FNM, FRE, AIG).
PS: What are we all thinking, that AIG is a worthless stock riding the waves of liquidity -- there is sound, solid analysis behind today's increase:
S&P Equity Upgrade Pushes AIG Shares Higher
http://www.streetinsider.com/Momentum+Movers/S&P+Equity+Upgrade+Pushes+AIG+Shares+Higher/4958799.html
Any idea why the 10 yr UST interest rate spiked at the same time as the T-Bill auction was reported?
hay robo; who is that skanky old cougar??
Can someone, preferably the TDs, please demonstrate how the POMO money ends up in the equities markets.
All the TD reporting on this phenomenon is internally inconsistent.
Marginal Equities prices are ramping up (as reported here ad nauseum), yet low volumes, which means very little real dollars spent (also reported here, ad nauseaum) indicate that the POMO money is NOT ending up in the US equities markets.
All these elaborate theories about how the POMO securites are converted to cash for the banks and PDs are fun to debunk, and mostly nonsense. But. I'm willing to be wrong and concede you guys may be cleverer than me and the banks are going through these elaborate ruses to obtain huge piles of cash to dump into the equities markets.
If you're right, then where the hell is the evidence the cash is ending up in the markets. All the money flow statistics quoted throughout various ZH stories say loud and clear. THERE IS NO CASH COMING INTO THE EQUITY MARKETS.
Therefore, based on your own presentatin of the "facts" POMO is not ending up in US Equities markets.
Program traders are goosing the markets at the margins, they leave flat at the end of the day, having succeeded in day trading their way at the margins. The index values are a fiction. They are not supported by any meaningful trading volume.
Despite all the sweet whispers from the Fed that it will pull out on time, the markets are very clearly already knocked up. Should these even be called 'bubbles' anymore since they have become the norm? According to a good majority of the financial world, normality equals overvaluation and overleverage. It's still up in the air as to who is more in denial: those who believed grossly inflated asset values were sustainable, or those who didn't believe the Fed would do absolutely everything in their non-transparent power to keep asset values artifically high for the foreseeable future. A glaring contradiction, I know, but one that is appropriate for our times.
The most frustrating aspect of all this is a rational investor's struggle to come to terms with the sorry truth: the Fed isn't distorting the market. It is the market. And so rationales for where the market "should" be based on fundamental economic analysis lose all purpose. Eventually, manipulations of reality become the reality. Some of us invest based on what we think we know; others invest on what others tell them they know; and most of us as a society, quite frankly, invest based purely on ill-informed momentum and 2-second web bites. The Fed has cleverly tapped into one of the great forces of modern finance: disdain for time-consuming fundamental analysis. It knew it never had to produce any semblance of a physical, tangible economy: it only had to gear up confidence in one and let the dumb money take over the pump. The worry is whether the monetary dance to keep that confidence propped up will get so convoluted that the Fed will trip on its own feet.
But in the meantime, stop fighting the printing press. Relax. The economy is recovering, and Oceania has crushed Eurasia.