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De Minimis POMO Ends As Sack Buys $1.6 Billion In TIPS; PDs Found Lacking In Cash As $210 Million Of November TIPS Auction Put Back

Tyler Durden's picture




 

Today's viagra-deficient POMO is now over, monetizing just $1.6 billion in TIPS. The Submitted to Accepted ratio is 5.3x, indicating cash shortage at the PDs who are now stuck with useless paper. Most notably, someone wanted to dump $210 million of CUSIP 912828NM8 which was the 9 year 8 month TIPS auction from November 4: so much for inflation "protection." Surprisingly, the MY3 4.5 year CUSIP which is the legendary October TIPS auction which closed at a negative high yield saw no interest in monetization. If we had to guess, investors, contrary to all expectations, are happy with an inflationary bet through the 5 year horizon, then expect deflation after (thus the putback to the FRBNY). How that makes sense is beyond us.

 

 

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Tue, 11/23/2010 - 12:18 | 749561 SheepDog-One
SheepDog-One's picture

Well, it certainly is all a crazy never before seen show no doubt....Im just wondering when someone will stop these insane lunatics. There has to be conversations going on right now in some underground command center, Dr Strangelove style.

Tue, 11/23/2010 - 12:26 | 749577 TheGreatPonzi
TheGreatPonzi's picture

Will the POMOs stop one day?

Tue, 11/23/2010 - 12:28 | 749584 TWORIVER
TWORIVER's picture

It seems they have stopped making a difference.

Tue, 11/23/2010 - 12:30 | 749585 scratch_and_sniff
scratch_and_sniff's picture

Anyone know anything about tonights FOMC minutes? Are we expecting anything?

Tue, 11/23/2010 - 12:37 | 749592 Cdad
Cdad's picture

Seems to me that some regular and nasty little ZH trolls have been hounding and mocking the ZH mantra, "This cannot end well."

Ummm...if anyone thinks that the price action on the Euro/USD is "normal" well, I got some news. 

And where is Orly with his "put back" on the USD/JPY being the currency cross to watch?  Clearly backwards.  Now, I sure have been wrong some some things, but that one yesterday seemed like obfuscation. 

Seeking clarity, and watching things end badly.

Cdad

 

additional:  anyone else get the feeling that copper is simply priced entirely wrong?

Tue, 11/23/2010 - 12:46 | 749634 HelluvaEngineer
HelluvaEngineer's picture

Copper is the result of bulltards piling in on the "reflation" trade bs, as covered by Lost Money.  With China slowing growth I can't see why the price wouldn't crash.  Is that what you mean?

Tue, 11/23/2010 - 12:57 | 749662 Cdad
Cdad's picture

Correct.  Momentum...yes...and the constant screeching from the tube of a fundamental reason for owning copper...which seem like absolute crap.

China MUST slow down and copper is stock piled there...meaning peak copper pricing...perhaps for years to come.

But what do I know...copper is kind of close to the color of gold.

Tue, 11/23/2010 - 12:34 | 749593 IrishSamurai
IrishSamurai's picture

"Bernank! Water has breached the hull ..."

"To the QE2 lifeboats.  Jamie, Lloyd, Timmah ... save me a seat."

"Benny, you can sit on my lap"

"Thanks, Brian.  Explains how you got your last name."

 

Tue, 11/23/2010 - 12:40 | 749609 Bruno the Bear
Bruno the Bear's picture

I'm surprised TIPS aren't keying off the personal consumption improvement more. A 2.8% growth in consumption is plenty to push inflation above the 1.5% implied by 5-year TIPS.

Tue, 11/23/2010 - 13:14 | 749720 the grateful un...
the grateful unemployed's picture

with Ben pushing money out of his helicopter consumers have more disposable income. it has nothing to do with jobs, or personal income, (now with mortgage rates creeping up the mortgage ATM machine will be shut down). but as rates creep up the speculative premium comes out of commodities. Bernanke tried that to cool off the markets once a few years ago, but it was obviously out of character.

He knows the inflation problem is inverse, wages and income drop faster than prices (including asset prices, esp gold prices). the economists were gushing about the housing bubble, oh look asset prices rise, but not inflation, aren't we smart little boys and girls.

now they catch the flipside of that, core inflation is rising faster than asset prices, (probably wage pressure from China, where real old fashioned inflation is the culprit)which i call stag deflation, as we approach economic parity with China, where inflation runs higher than BOC rates, as a matter of policy. the US isn't the only economy which offers TIPs to inestors, (and boy wouldn't you rather buy some Chinese TIPS) but Europe has them as well, which I tried to buy a few months ago, but its just too difficult for ordinary investors.

Tue, 11/23/2010 - 13:06 | 749627 Paper CRUSHer
Paper CRUSHer's picture

Funny, an optimistic work collegue and i had an argument at the office a few weeks ago regarding POMO being successful in keeping markets green no matter what goes down in Europe.

Next time if i bump into him I'll make sure to take my six-shooter along so i can pull off his toupee n' hurl into the air and fire buckshot.

My ol' Grandpa always juiced to say, "the wigger they are the hairdo they fall".

Tue, 11/23/2010 - 12:44 | 749628 the grateful un...
the grateful unemployed's picture

The TIPS play has been at the short end, and in the etfs which follow the current price much better, and TIPs are definitely in a ramp-up cycle. Rates and CPI. The longer notes have never been the way to go, but the Fed wants you in stocks, so there you must go, heh Mr Gross?

Tue, 11/23/2010 - 12:53 | 749651 Cognitive Dissonance
Cognitive Dissonance's picture

All I can say is that the cows will come home before these POMO's end. BTW the next POMO, scheduled for Nov 29, 2010, is actually two POMO's totalling $7.5B to $10.5B.

Simply amazing.

http://idioms.thefreedictionary.com/until+the+cows+come+home

http://www.phrases.org.uk/meanings/382900.html

Tue, 11/23/2010 - 13:27 | 749752 doolittlegeorge
doolittlegeorge's picture

one trillion dollar rescue fund in Europe.  It will be tapped.  this is a "real bank bailout" otherwise known as "competitive advantage" for US based banks and "competitive disadvantage" for banks in Europe.  I think if Hoenig replaces Bernanke you'll see an additional "calming" as well.

Tue, 11/23/2010 - 14:34 | 749961 TruthInSunshine
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'Like a good neighbor, The Bernank is there.'

Are you in good hands?

Tue, 11/23/2010 - 18:18 | 750766 Common_Cents22
Common_Cents22's picture

Here comes Green POMO!

 

The U.S. General Services Administration, which runs the government fleet, bought at least 14,584 hybrid vehicles in the past two fiscal years, or about 10 percent of 145,473 vehicles the agency purchased in that period,

Read more: http://nation.foxnews.com/hybrid-cars/2010/11/23/obama-administration-buys-one-four-hybrids-consumer-market-slumps#ixzz1698v7T8c

Do NOT follow this link or you will be banned from the site!