This page has been archived and commenting is disabled.

Deconstructing POMO As Fed Becomes The Second Largest Holder Of US Treasurys In The World

Tyler Durden's picture




 

With today being yet another POMO day, it is only fitting to do the definitive summary of how the Fed's Open Markets Group distorts various asset classes with its liquidity ramps. So all those who doubt thet Fed has an impact on stocks, please look at the chart below. Incidentally, today is the day the Fed will likely overtake Japan as the second largest holder of US Treasurys. Recall that Japanese holdings of US paper were $821 billion as of July. Well, as of September 30, the Fed held $811.7 billion in Treasurys, and in the days following, there were two POMOs: one for $5.2 billion and one for $2.2 billion, bringing its total to $819.1 billion. Which means that if today's POMO operation, which launches imminently, is larger than $2 billion, the Fed will become the second largest holder of US paper in the world. And it won't stop there: China is merely $25 billion away. At a run rate of $10 billion in POMO purchases per week, the Fed will be the largest holder of US Treasuries in the world before the midterm elections.

Back to Pomo, where John Lohman has submitted all the narrative and data one needs to know why it is insanity to oppose Brian Sack.

The truth is stranger than fiction and here are a few numbers to prove it.  I’d like to think this data came from The Onion, but it didn’t (and anyone with access to W’s the Google’ and a calculator can prove it).

Brian the Sack’s website (here) lists POMO operations back to August 25, 2005 (yes, they were conducting POMO under the radar before announcing ‘an extension in maturities targeted’ in a bazooka waving move, a la Paulson style, in March 2009).  In sum, the Sack & Company have POMOed the market on 203 of the 1,334 trading days since (as of October 5, 2010).  As this is well more than the number of observations necessary for statistical significance (approximately 30) in order to draw conclusions about reality from a sample, we can draw some conclusions as to just how much the Fed is artificially chumming price levels in what was once a free market.

Now, I’m sure this is just coincidence.  It just so happens that POMO funds received by primary dealers “appear” to be ramping stocks and causing (dare I say short) selling in gold.  Only The Onion would post something as preposterous.  It’s also interesting to note the doucherious impact the Fed is having on yields.  Ironically, the Sack recently stated in a speech:

Nevertheless, balance sheet policy can still lower longer-term borrowing costs for many households and businesses.

Perhaps someone should tell Brian, Ben & Co. to mute Krugman and revisit the data (surely they have  the Google and calculators at 33 Liberty).  No, even professional BLS weasels couldn’t make this up (here and here).  Proving, yet once again, that the truth is stranger than fiction, especially in post-crisis capitalism.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 10/06/2010 - 09:52 | 628892 Calls and Putz
Calls and Putz's picture

There's no link to Brian Sack's website. I'd like to see the listing of all POMO days.

Wed, 10/06/2010 - 09:55 | 628907 Tyler Durden
Tyler Durden's picture

This has been posted only about one thousand times on ZH: http://www.newyorkfed.org/markets/tot_operation_schedule.html

Wed, 10/06/2010 - 10:18 | 628988 Kreditanstalt
Kreditanstalt's picture

That "tentative outright Treasury operation schedule"  site is all so...PROFESSIONAL looking.   So clinical and reasonable-sounding.  As if it were an auction of art, a list of dividend payments or prices of rare stamps.

I rather like "tentative outright Treasury monetization schedule" because the truth may even set the Fed free...

Wed, 10/06/2010 - 11:00 | 629141 dcb
dcb's picture

other sites will put something like a stick, or a quck link on the front page to information.

I love the content, but some things deserve seperate areas.

Wed, 10/06/2010 - 12:06 | 629392 lettuce
lettuce's picture

thanks tyler. great post.

Wed, 10/06/2010 - 23:12 | 631208 GoatETF
GoatETF's picture

C'mon now Tyler, are you taking lessons from BLS? It has only been 23 times ;)

http://www.google.com/search?q=site%3Azerohedge.com+http%3A%2F%2Fwww.new...

Wed, 10/06/2010 - 09:52 | 628893 bigdumbnugly
bigdumbnugly's picture

doucherious?

wasn't in my vocabulary...  but is now.

Wed, 10/06/2010 - 09:55 | 628902 Raymond K Hassel
Raymond K Hassel's picture

+10 for 'doucherious' alone

Wed, 10/06/2010 - 10:10 | 628963 Species8472
Species8472's picture

right up there with basicalier.

Wed, 10/06/2010 - 09:55 | 628903 RobotTrader
RobotTrader's picture

Treasuries, bitchez!!!

Wed, 10/06/2010 - 10:21 | 628993 Dollar Bill Hiccup
Dollar Bill Hiccup's picture
10 yr 2.39 ylds, nice, Mr. Bill must be laughing so hard he is pissing himself. Oh, and Chairman Mao, no more debt for you! See Martin Wolf today in the FT on currency wars.
Wed, 10/06/2010 - 09:56 | 628909 Restcase
Restcase's picture

I don't think they see a downside to being the largest holder of treasuries in the world.

Further, if the link between POMO and stock ramps were proven - to their satisfaction - they would view rising stock prices as a plus.

We're dealing with hardcore idealogues here.

Wed, 10/06/2010 - 10:25 | 629008 Kreditanstalt
Kreditanstalt's picture

The Treasury doesn't like free money, doesn't like competition but sure likes counterfeiting.

It's kind of like me selling off my Morgan dollar coin collection, bit by bit at $30 a coin, to coin dealers.  Then, using my legal (according to me), though illegal (according to the competition) printing press, I print off another batch of counterfeit Federal Reserve $1.00 notes and go buy my coins back from those same dealers at $32.00 a coin...

So counterfeiting is all relative, isn't it, to WHO IS HOLDING THE GUN...

Wed, 10/06/2010 - 11:06 | 629167 Restcase
Restcase's picture

Bought a few Morgans last week for $17 each. I like carrying them in my pocket. Feels like I'm in a spaghetti western.

Wed, 10/06/2010 - 11:08 | 629179 Goldenballs
Goldenballs's picture

Hang em high partner ..........................................

Wed, 10/06/2010 - 11:10 | 629183 Goldenballs
Goldenballs's picture

Hang em high partner .......................................... Soon will be the Wild West ... only it will be Wild West,North,South and East.

Wed, 10/06/2010 - 09:56 | 628910 Bearster
Bearster's picture

An interesting data series would be to look at the half-life of price level changes in each market, following POMO.

Any bets the half-life is decreasing?

Wed, 10/06/2010 - 10:01 | 628929 the not so migh...
the not so mighty maximiza's picture

Guaranteed that the law of diminishing returns is in effect for these control freaks

Wed, 10/06/2010 - 10:11 | 628969 HEHEHE
HEHEHE's picture

It's a given. That's the idiocy of the entire move.  Any supposed "benefit" of QE is only maximized when asset prices have collapsed.  Doing it while prices are at a high level minimizes its effectiveness unless the size is so overwhelming as to deluge current asset prices; something on the order of $5T.  To be bullish on stocks at this point is rather silly.  Gold etc is another story; though I think the metals have gotten a bit ahead.

Wed, 10/06/2010 - 09:57 | 628912 TooBearish
TooBearish's picture

uh..... so POMO works then rite?

Wed, 10/06/2010 - 10:07 | 628949 Threeggg
Threeggg's picture

As I look at the markets the Dow is the only one green by 8.20 points.

So I would say that it is just delaying the downfall to another day.

This financial Shitstorm is going to be the largest entry in future History books.

Gold is hitting the "proverbial" (something is wrong with the world economy) bell with a "Pile Driver" and the MSM hates everything it stands for. ?

Get ready for a Shitstorm never seen before.

Wed, 10/06/2010 - 10:23 | 629000 asteroids
asteroids's picture

POMO works until one day it does not work. That day is coming folks. That is the day the FED loses its mystical powers and the market will finally start correct. I see it coming.

Wed, 10/06/2010 - 11:01 | 629148 Sancho Ponzi
Sancho Ponzi's picture

It leads to misallocation of capital which never works long-term. 

Download this from Cotzias Shipping:

http://cotzias.gr/reports/COTZIAS_ECONOMIC_OUTLOOK_2010_09_SEP.pdf

Navigate to the following charts:

S&P500 vs Baltic Panamax

S&P500 vs Baltic Supramax

S&P500 vs Baltic Handymax

Reality is a bitch.

Wed, 10/06/2010 - 10:01 | 628924 Sudden Debt
Sudden Debt's picture

Just buy any stock. It will tripple in 2 years time.

Wed, 10/06/2010 - 10:04 | 628939 umop episdn
umop episdn's picture

Yep. After you sell the stocks, you will have enough paper to buy a doucherious burger. With flies.

Wed, 10/06/2010 - 10:42 | 629076 Sudden Debt
Sudden Debt's picture

here in Europe, they only sell fresh Burgers... :(

Wed, 10/06/2010 - 11:27 | 629238 Ripped Chunk
Ripped Chunk's picture

Buy em' and freeze em'. You won't be able to finance a happy meal in about a year.

Wed, 10/06/2010 - 10:02 | 628931 Everyman
Everyman's picture

So the "greatest of stock pickers" and "investors" since 2005, in reality are either insiders with inside information, or just dumb stupid following the POMO rut in the dirt?  That's what you are telling me?

The more I learn about this so called "industry" or "profession" the more I feel like I need to take a shower.  The whole damned thing is rigged, and for ANYONE, and i mean ANYONE to defend this caldron of crapola the "bastion of caspitalism" makes me wanna puke.  You could call your commode the very same.  This just sucks.

THis is the "free market" we have heard so much about?  WHy bother paying for an SEC, or a UST, or even a FED Reserve.  Screw it, let's just embrace larceny and theft by deception.  Seems all the rage and if the Fed's can do it, I am sure that the cases of insider trading can be overturned.  How can the prosecuting arm be guilty of the very same activities of those that are breaking the laws???

My faith in everything this country stands for is at an all time low.  I thought the last place to find this would be in the "bastion of capitalism", and I was wrong.

Wed, 10/06/2010 - 10:25 | 629004 hedgeless_horseman
hedgeless_horseman's picture
So the "greatest of stock pickers" and "investors" since 2005, in reality are either insiders with inside information,...
by hedgeless_horseman
on Fri, 09/03/2010 - 09:41
#562073

Fundamental analysis?  Earnings?  Technical analysis?  Charts?  We don't have a prayer when Ben has his finger on the button under the table. 

You can take the ghosts of Graham, Dodd, Edwards, and McGee, as well as every CFA on the planet to manage a portfolio.  I'll take one insider at 33 Liberty and my performance will wipe the men's room floor with your's.

Wed, 10/06/2010 - 10:25 | 629009 asteroids
asteroids's picture

Capitalism? What a quaint notion!

Wed, 10/06/2010 - 10:43 | 629079 Mad Mad Woman
Mad Mad Woman's picture

Well said.

Wed, 10/06/2010 - 11:00 | 629093 hedgeless_horseman
hedgeless_horseman's picture

Insider trading at The Fed...

http://www.theatlantic.com/business/archive/2010/10/is-it-wrong-to-capitalize-on-nonpublic-fed-information/64043/

If you work at the Fed, own a trading account, and have not personally sucked Bernanke's shlomo in a long and satisfying manner, I would be very worried about becoming a sacrificial lamb in a CNN perp walk.  Act accordingly.

Just kidding!   It shall never be punished for national security reasons.   Just imagine Mary Shapiro and her team of .gov subsidized tranny-porn addicts trying to investigate the pillar of transparency that is The Fed.  lol.

 

Wed, 10/06/2010 - 10:17 | 628984 -1Delta
-1Delta's picture

Thanks, that is interesting...

Wed, 10/06/2010 - 10:32 | 629030 FOC 1183
FOC 1183's picture

That's an interesting chart (thanks for posting) but I looked at size impact across the full series last night and could not find anything conclusive.

John Lohman

Wed, 10/06/2010 - 12:03 | 629373 Sancho Ponzi
Sancho Ponzi's picture

Don't lose heart, Everyman. The market is still big enough to crush these clowns, just as the market has crushed the NIKKEI. 

As I posted earlier, download this from Cotzias shipping: 

http://cotzias.gr/reports/COTZIAS_ECONOMIC_OUTLOOK_2010_09_SEP.pdf

...and navigate to:

S&P500 vs Panamax

S&P500 vs Supramax

Those charts will tell you everything you need to know. 

Wed, 10/06/2010 - 10:08 | 628950 captain sunshine
captain sunshine's picture

What happened to only using proceeds from mbs to buy treasuries? 10 billion a week is 520 billion a year. They "only" have 1.3 trillion in mbs.

Wed, 10/06/2010 - 10:57 | 629088 Sudden Debt
Sudden Debt's picture

DELETE Captain Sunshine's social security number

ENTER

ERASE Captain Sunshine's credit lines

ENTER

DELETE dental records Captain Sunshine

ENTER

 

You see! The government does work!

Wed, 10/06/2010 - 10:08 | 628951 wiskeyrunner
wiskeyrunner's picture

This is good news, it means the Fed will go ahead with QE2. It's all good. Bad economic data means Fed QE2. Good economic data means the recovery is gaining steam. It's all rigged people, stop fighting the trend.

Wed, 10/06/2010 - 10:11 | 628952 Spalding_Smailes
Spalding_Smailes's picture

Got Gold Miner ?

VGGCF up 17% yesterday, up another 14% today.... $ 0.715

 

Update - up 21% now.

Wed, 10/06/2010 - 10:55 | 629126 nedwardkelly
nedwardkelly's picture

48k shares average volume...

Wed, 10/06/2010 - 10:10 | 628953 tmosley
tmosley's picture

Am I reading this right?  Gold, commodities, and oil go DOWN on POMO days, while the USDX goes UP?  What kind of crazy, mixed up world is this?

Wed, 10/06/2010 - 10:17 | 628987 BobPaulson
BobPaulson's picture

Just wait: when the rocket scientists see this histogram their conclusion will be that you just have to make every day a POMO day to get a 50% ramp on the S&P (pinky nail in mouth, white cat on lap). 

Wed, 10/06/2010 - 10:18 | 628990 hugolp
hugolp's picture

Yeah, thats weird.

Wed, 10/06/2010 - 11:55 | 629341 Bearster
Bearster's picture

Which POMO days do you see gold down on your screen?

Wed, 10/06/2010 - 10:09 | 628955 Diggintunnels
Diggintunnels's picture

So what, who's going to stop them?  Does Ben answer to anyone except the people who want to inflate away our problems?

Wed, 10/06/2010 - 10:12 | 628964 Zeddicus
Zeddicus's picture

I know this isn't new, but I find it utterly mind-boggling.  How is it even POSSIBLE that our own central bank is "buying" our own debt with "money" created out of thin air?  Whose brilliant idea was it to allow this to ever happen in the first place?  In what universe does this even make sense on any level? 

I'd like to chalk this up to stupidity, but I know the people doing it aren't stupid.  So that leaves only one other possibility: malicious evil.

 

Wed, 10/06/2010 - 10:26 | 629013 macholatte
macholatte's picture

 

May the forces of evil become confused on the way to your house.
George Carlin

Wed, 10/06/2010 - 10:37 | 629055 gmrpeabody
gmrpeabody's picture

You aren't from around here..., are ya stranger?

Wed, 10/06/2010 - 12:15 | 629438 RockyRacoon
RockyRacoon's picture

Did you ever pay off a credit card with a credit card?

Wed, 10/06/2010 - 10:12 | 628971 cnbcsucks
cnbcsucks's picture

PONZIPALOOZA!!!

 

Wed, 10/06/2010 - 10:17 | 628980 Trifecta Man
Trifecta Man's picture

So if I understand this correctly, Americans will be paying taxes for as long as the eye can see to the government, so that the government can give almost $1 trillion to the Federal Reserve Board as interest or principal payments, even though they can print money like crazy.  What a bunch of thieves!

Wed, 10/06/2010 - 10:15 | 628981 wiskeyrunner
wiskeyrunner's picture

You just can't get any closer to risk free. Buy any US index, ZERO risk to the downside. Maybe a small correction like Monday's every now and then.

Wed, 10/06/2010 - 12:40 | 629557 Geoff-UK
Geoff-UK's picture

Unless what they're denominated in becomes worthless itself.

Did you miss that, or were you just being sarcastic on your post?

Wed, 10/06/2010 - 10:17 | 628982 NOTW777
NOTW777's picture

time for ben to tell us again - theres no inflation - its contained;

dont mind that 2000 gold

 

backdrop today - jobs down, individual companies cutting, reducing is so out of contrast to soaring equities

Wed, 10/06/2010 - 10:53 | 629113 wiskeyrunner
wiskeyrunner's picture

Yes the Federal Reserve is controlling the stock market vis the FRBNY, who then supplies Goldman and the other dealers with free capital so they can juice the stock market. How else are we going to get confidence back. It's a fact that a rising stock market promotes confidence. So hop on board at the next dip, it's all rigged to the upside.

Wed, 10/06/2010 - 11:46 | 629297 Minion
Minion's picture

It's a fact that rising confidence correlates with a rising stock market.  Causation is up for debate (are you more confident now that FED has shot the tape with a fresh dose?)

Wed, 10/06/2010 - 10:16 | 628983 hugolp
hugolp's picture

It wont be long until the Fed is again the biggest holder of USA gov debt.

Wed, 10/06/2010 - 10:22 | 628985 Ieetseelmeet
Ieetseelmeet's picture

Stop the charade!

Cut out the middle man.

Let the Fed actually print the money and send out all the government checks.

Wed, 10/06/2010 - 10:19 | 628989 sunnyside
sunnyside's picture

Doesn't the Social Security Admin hold a couple of trillion in Treasuries?

Wed, 10/06/2010 - 10:28 | 629019 Zeddicus
Zeddicus's picture

Not really.  As I understand it, the SS "funds" are a special sort of intergovernmental IOU that is completely unmarketable (worthless) on the outside - they aren't actually US Treasuries and can't be sold on the open market.

 

Wed, 10/06/2010 - 12:33 | 629521 frank
frank's picture

according to them it is not a ponzi:

http://www.ssa.gov/history/ponzi.htm

 

also, there is no gov't guarantee (implicit or explicit) on Fan/Fred toxic junk:

"But there is no guarantee, there is no explicit guarantee, there is no implicit guarantee, there is no wink-and-nod guarantee. "

http://www.taxfoundation.org/blog/show/23617.html

 

also, they will not monetize the debt:

"We're not going to monetize the debt," Mr. Bernanke declared flatly, ...

http://www.washingtontimes.com/news/2010/feb/25/bernanke-delivers-warning-on-us-debt/

 

these social programs (hud, CRA, social security, etc etc) will unfortunately be our undoing and this combination of corporatism and socialism will end up leading to full blown Marxism. 

Wed, 10/06/2010 - 10:21 | 628996 espirit
espirit's picture

After today's Pomo sale, the next schedule won't be released until Oct 13, which means none until then.

Dollah, the markets, and the media are on their own. Buckle up, it's going to get bumpy.

Wed, 10/06/2010 - 10:28 | 629018 Everyman
Everyman's picture

NO, these fucking crooks have already figured out what to do those days, and will cheat on the downside.

Wed, 10/06/2010 - 10:28 | 629023 sweet ebony diamond
sweet ebony diamond's picture

Brian,

You are being schooled.

Go back to your books where you can do less harm.

http://blogs.wsj.com/economics/2009/04/17/who-is-brian-sack/

Wed, 10/06/2010 - 10:31 | 629025 NOTW777
NOTW777's picture

spill in aisle 9 - CTXS

Wed, 10/06/2010 - 10:32 | 629032 InconvenientCou...
InconvenientCounterParty's picture

I'd like to echo the previous post requesting trend analysis on the S&P/gold on POMO days. I seem to recall that lately the S&P in terms of Gold is neutral to negative on those days.

Could we have a trend rolling over here?

Wed, 10/06/2010 - 10:34 | 629041 macroroni
macroroni's picture

time to stock up on tea and crumpets. my dollars might not last through the weekend.

down with bloody big Fed.

Wed, 10/06/2010 - 10:36 | 629049 EB
EB's picture

Nice work, Lohman.  Also, look at this study by Trading the Odds.  We can surmise that every stock rally since 2005 was POMO induced.

Below is a bit stale, but the manipulations are nonetheless pronounced.

Wed, 10/06/2010 - 10:36 | 629054 Everyman
Everyman's picture

And Turbo Timmy is crying about other countries "debasing their money"!  Is this for real or is this what wuold be called surreal?

http://www.bloomberg.com/news/2010-10-06/geithner-sees-damaging-dynamic-...

Wed, 10/06/2010 - 10:43 | 629080 lbrecken
lbrecken's picture

Please view this................hwo can this guy not know about POMO?

 

http://www.cnbc.com/id/15840232?video=1608189117&play=1

Wed, 10/06/2010 - 10:44 | 629082 Chemba
Chemba's picture

Well, once the Fed is the largest holder of USTs that can solve a lot of problems.  For example, the Fed could unilaterally reduce the coupon on its holdings.  Or, it could simply refuse payment from the Treasury.  In fact, the Fed could simply write off the USTs and reduce the government's debt in half (or whatever % it owns).

You guys on ZH never look at the silver lining!

Wed, 10/06/2010 - 12:19 | 629458 RockyRacoon
RockyRacoon's picture

You mean the Fed could commit suicide?  Right.

I don't see those bankers as suicidal -- not yet anyway.

Wed, 10/06/2010 - 12:43 | 629569 Geoff-UK
Geoff-UK's picture

You, sir, are hilarious!

<or were you serious?>

Wed, 10/06/2010 - 10:45 | 629085 Trifecta Man
Wed, 10/06/2010 - 10:55 | 629121 sweet ebony diamond
sweet ebony diamond's picture

Paging Brian Sack. Paging Brian Sack.

Your presence is requested at the following address:

http://finance.yahoo.com/tech-ticker/markets-soaring-%22but-the-world-is...

 

Wed, 10/06/2010 - 11:34 | 629258 Occams Aftershave
Occams Aftershave's picture

Is Jimmy Rogers a midget?

Wed, 10/06/2010 - 10:49 | 629101 fresbee
fresbee's picture

http://247wallst.com/2010/10/06/cost-of-financial-bail-out-almost-too-good-to-be-true/

 

Now who can contest that as a justification for QE2. QE helps the American taxpayer make money.

Wed, 10/06/2010 - 10:56 | 629129 wiskeyrunner
wiskeyrunner's picture

Yes the Federal Reserve is controlling the stock market vis the FRBNY, who then supplies Goldman and the other dealers with free capital so they can juice the stock market. How else are we going to get confidence back. It's a fact that a rising stock market promotes confidence. So hop on board at the next dip, it's all rigged to the upside.

You can either make some free money or stand around kicking the dirt and muttering under your breath.


Wed, 10/06/2010 - 11:02 | 629152 Everyman
Everyman's picture

FINE!  They want to do this, THEN LET US ALL KNOW IT IS HAPPENING, and JUST WHO IS GETTING THE MONEY, and WHAT ARE THEY INVESTING IN.

 

That is the problem. DISCLOSURE and that little thing called "Transparency" (as opposed to transexual, that is where the SEC gets a bit confused).

Hell yes, I'll, play, but as long as the Fed Res is slushing out the dollars to people, at least clue me in on the trades to make and when.  They don't even have to give me money I will use my own.  Just let me know the games and the "rules" at this moment.

Wed, 10/06/2010 - 12:23 | 629477 earnyermoney
earnyermoney's picture

I think the FX markets are showing the true value of "free" money.

Wed, 10/06/2010 - 11:03 | 629153 MilleniumJane
MilleniumJane's picture

I get a warm fuzzy feeling in the knowledge that just about every day is POMO day!  I feel so secure knowing that my mutual fund and 401K are in safe hands.  Ooops.  It's medication time...

Wed, 10/06/2010 - 11:03 | 629156 RobotTrader
RobotTrader's picture

Virtually every Treasury purchase by our foreign debt enablers financing our $14 trillion deficit is now in a winning position.

How lucky is that?

Wed, 10/06/2010 - 11:59 | 629303 hedgeless_horseman
hedgeless_horseman's picture

Virtually every Treasury purchase by our foreign debt enablers financing our $14 trillion deficit is now in a winning position.

Only if they sell before maturity, WHICH THEY CANNOT DO; so they are stuck with ZIRP yields.  If I could post a chart of the portfolio's return it would look more like a horizon line than your hockey stick.  If adjusted for inflation it would probably even be a red horizon line, rather than green.

Of course you know all of this, Robo.  It's misleading posts like this one that causes others to dismiss your good stuff.

Wed, 10/06/2010 - 11:55 | 629336 Ben Fleeced
Ben Fleeced's picture

Would this be part of the 2008 campaign promise to return the wealth of the United States to its rightful owners? Redeamable or not?

Wed, 10/06/2010 - 11:59 | 629356 Minion
Minion's picture

And who is driving that little red line on the bottom of the chart?  :D

Wed, 10/06/2010 - 11:11 | 629184 dcb
dcb's picture

can someone explain the data for treasuries presented.

if basis points goes up, doesn't that mean yeild goes up as well? or do I have it backwards

Wed, 10/06/2010 - 11:15 | 629196 CitizenPete
CitizenPete's picture

I have but one word for ya:

 

ENDTHEFED

Wed, 10/06/2010 - 11:17 | 629202 Goldenballs
Goldenballs's picture

"Afternoon,Printing Shop" - "The lads can,t work any more hours,were already at full pelt" -"what printing is taking to much time,use a colour photocopier instead" - Just another everyday story from those nice Fed Folk - Doing their best on your behalf everyday in Oblivionville"

Wed, 10/06/2010 - 11:20 | 629211 JacksWastedLife
JacksWastedLife's picture

If some institution of a country buys country's debt with printed money, doesn't it mean that both are f***ed? Isn't it just a feed-back loop?

Does it mean that the price of that papers is artificially leveraged by this purchases? 

Wed, 10/06/2010 - 11:20 | 629214 Youri Carma
Youri Carma's picture
Charts: S&P Will Go Down -  Robin Griffiths, 27 September 2010, (CNBC Vid) http://www.cnbc.com/id/15840232/?video=1601032652&play=1

U.S. Bonds May Turn `Worthless,' Marc Faber Says In Handelsblatt Interview, 5 October 2010, by Tony Czuczka (Bloomberg) http://www.bloomberg.com/news/2010-10-05/u-s-bonds-may-turn-worthless-marc-faber-says-in-handelsblatt-interview.html

Marc Faber Interview in Handelsblatt (google trans from German) http://tinyurl.com/3yl4hv4

Wed, 10/06/2010 - 11:35 | 629231 Shylockracy
Shylockracy's picture

Do you ever get that funny feeling that an evil race of tyrannical devils runs this market -and most of anything else for that matter- since times immemorial?

Here's an excursus on Wall St. Belphegor Larry Summers, by the author of the upcoming documentary "Inside Job", Charles Ferguson.

 

Larry Summers and the Subversion of Economics

http://chronicle.com/article/Larry-Summersthe/124790/

 

 

Wed, 10/06/2010 - 12:05 | 629393 macholatte
macholatte's picture

You need to go back to the Clinton years where the foundation for the destruction of America was laid which MSM will never do. The Community Reinvestment Act, the Repeal of Glass Steagal, NAFTA, GATT, WTO and so on. All Clinton. Sommers was there working for Rubin who was from Goldman and on Citi Bank's payroll while Sec of Treasury (he got  $100M signing bonus when he left Treasury to go to Citi) and the granfalloon Greenspan as well as Soros. Never forget the Soros machine.

Bush II caused a delay in game or actually made things better for them, depending on your sun glasses. Then they got their wet dream, a college professor, Marxist who they could lead around like a bull with a ring in his nose, guided by the Soros funded organizations, they came back to the scene of the crime to finish the job.

It's history and well documented.

 

Wed, 10/06/2010 - 12:55 | 629621 frank
frank's picture

FINALLY someone says it. THANK YOU.

Wed, 10/06/2010 - 11:31 | 629251 wiskeyrunner
wiskeyrunner's picture

It's about time for the lunch rally, folks at lunch will get a glimpse at the market and feel confident.

Wed, 10/06/2010 - 11:31 | 629252 99er
99er's picture

Chart: ES and ZB

Hey, Big Boy, is that a bazooka in your pocket?

http://99ercharts.blogspot.com/2010/10/es-and-zb_06.html

Wed, 10/06/2010 - 11:38 | 629280 SDRII
SDRII's picture

If Fed runs gold to $3000 and remarks the portfolio it would fuilly offset the hit from a selective treasury defualt on owned debt. @ $7000/oz you have covered the MBS portfolio. Obviously leads to a freegold scenario as does zero to address the ongoing bleeeding (deficits/printing required) to fund the real economy. Gold afterall is the only asset on the balance sheet that can be revalued

Wed, 10/06/2010 - 12:22 | 629469 RockyRacoon
RockyRacoon's picture

Shadow Gold Price (SGP) ... that borrows from the Bretton Woods formula for valuing money in a gold-exchange regime (i.e. the fixed value of a currency equals its outstanding monetary base divided by official gold holdings). Under this formula the exchange rate of the US dollar to an ounce of gold would be about $8,250 presently, a figure that reflects the amount of monetary base inflation already engineered by the Fed. (The US monetary base approximated $2.15 trillion in September and reported official US gold holdings have remained relatively constant at about 8,133.5 metric tons or about 261.5 million ounces.) We approached the SGP from another angle last month and came away with a policy action we believe the markets will begin to discount. The Fed’s September 24 balance sheet reported the value of its “Gold Certificate Account” to be worth $11.037 billion, a figure that implies the Fed has claims on the US Treasury’s entire stock of gold and that it is carrying those claims on its balance sheet at Treasury’s official gold price — $42.22/oz ($11.037 billion divided by 261.5 million ounces).

http://zmarter.com/finances-opinions/who-is-john-galt.html

Wed, 10/06/2010 - 11:39 | 629285 wiskeyrunner
wiskeyrunner's picture

The financial news heads will say " markets are at there highs for the day" the lunch crowd will feel confident and order that juicy steak.

Wed, 10/06/2010 - 12:54 | 629617 Geoff-UK
Geoff-UK's picture

Yup.

And I sincerely wish there was a financial mass media that would declare how:

"today's gold price indicates that U.S. dollars are worth increasingly less and less when weighted in gold, and therefore you can buy much less gold with U.S. dollars than you could buy just one year ago" (instead of opposite perspective, where they report "gold is worth $300 more than it was a year ago").

Think it would be easier for Joe Sixpack to grasp that gold isn't becoming more scarce--it's his dollars in his pocket that are turning to shit.

Wed, 10/06/2010 - 12:27 | 629500 docui mihi
docui mihi's picture

I understand that the fed is pumping money into the market with POMO in theory but am having trouble grasping the specifics of bond purchases ect does anyone have a chart showing the process that they could share?  Sorry if its been posted before and thanks in advance.

Wed, 10/06/2010 - 14:22 | 629888 sbenard
sbenard's picture

They WANT it to be complicated so that most people can't comprehent it! So sophisticated, you know. "Let them eat cake", and all that! That way, you have to be an economic elitist to understand how swiftly they're leading us into the abyss!

I would also love to see such a flow chart! More sophistication!

Wed, 10/06/2010 - 14:18 | 629879 sbenard
sbenard's picture

When do we begin calling it, "monetizing the debt"?

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