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Fed To Ramp Up Stocks In September Thanks To Front-Loaded POMO Schedule
It is no secret that money paid to Primary Dealers via the Fed's POMO monetization tends to immediately find its way in risky assets, most notably stocks. Yet one of the major complaints against the Fed's QE Lite by the permabull brigade, is that the amount of weekly monetization is just far too low to make much of a dent on stocks, even assuming massive leverage and the deranged computerized feedback loop algos that take the smallest move and make a tsunami out of it. Well, according to Morgan Stanley, the Fed will make sure that over the next three weeks hedge fund LPs are happy, that redemption requests are sparse, and that September wil be an up month for all those levered to the hilt and chasing beta: for September/October the Fed is now expected to monetize double the amount of bonds in Aug/Sept. In other words, the Primary Dealers, aka Fed Lites, will be using tens of billions of brand new Fed printed money to chase the highest beta stocks they can find. And they will most certainly be using made up government data to facilitate this pursuit.
From Morgan Stanley's Jim Caron:
Our MBS strategist, Janaki Rao, highlights that the Fed MBS portfolio paydown for the Sept/Oct period equals a higher than expected $24.6bn which will be offset by higher than expected Fed purchases of USTs to keep their balance sheet from shrinking. Recall that the Fed's stated goal is to keep it's balance sheet from shrinking as mortgage and agency bonds they bought during QE mature or roll-off. The Fed's stated goal is to keep their balance sheet at ~$2.05Tr which is why they are replacing the run-off of MBS and agencies holdings with UST purchases.
The significance is that the speed of refinancing in mortgages (and therefore the speed of purchases of USTs) is 2x faster than both our and market expectations. So, any stimulus that may come as a result of MBS refinancing has been brought forward. The $24.6Bn is substantially higher than the $11.8bn estimated in the Aug/Sept. period and will thus mean greater UST buying in the September/October period.
One final point, Fed purchases of USTs are not the ultimate governing factor driving yields. But it may instead be a headwind against rising yields. Note also that we expect the Fed to overweight their purchases in the 5-10yr sector.
Good luck to all.
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Monetize, buy junk, manipulate, refuse FOIA requests to say who got the money... The private members who own the Federal Reserve should be so proud of themselves.
PS: An no one will ever go to jail of course for any illegal activities. And if you come close to telling on the Fed, a dirt nap is in your future.
Since you raised this important issue, and even though this thread is going stale, I'm going to post a preliminary reply just to flesh out some basic themes that have been discussed on different posts.
Premise tree:
#1 - The continuing political viability of the USA is completely dependent on the success of the Fed to maintain asset values.
#2 - The Fed has exposed itself to tremendous risk by telegraphing its asset valuation positions/mechanisms to any/all who care to see.
#3 - The easiest and most direct means of (a) taking down the USA; and (b) assuming either global power and/or simply seizing domestic political/military control is to destroy asset values being supported by the Fed.
#4 - Ergo, the easiest and most direct means of destroying asset values is either a full exposure of blatantly illegal, and/or counter-leveraging, Fed asset support activities.
Ok, so now that the basic mechanism(s) for destroying asset values, and by relationship, the USA, in order to assume either global power and/or domestic control, is laid out, who are the respective players? For ease & simplicity, we can group them into two separate groups - foreign & domestic:
I. Foreign
II. Domestic
Now, as MarketTruth mentions above, such a step is fraught with risk for domestic players who don't have adequate (personal) protection. That's why the most likely candidate might either be the MIC or ... bankers.
Think about bankers for a moment; they have all the tools and they have all the information. If they could kill the king and assume the top position themselves, they could successfully dodge paybacks (assuming they eliminated their rivals upon taking control of the respective vengeance mechanisms).
As to foreign sources, what is holding them back from revealing their hands? Nuclear attack? Who knows; really who cares. It only muddies the analysis - the key is to first determine the likely culprits and then ID their time-line.
My bet is on an internal judas goat. Imagine the potential payoff of shorting & crashing an entire global financial system, and then taking complete political of the USA (and its military) simply by exposing the Fed's illegal activities with a wide scale P/R campaign (after all, the power-elite own, and in fact, ARE, the MSM).
CogDis and I have had disagreements on the unity of the power-elite. My belief is that as in any criminal enterprise and poker game, when one is holding a strong hand, the potential reward(s) & temptation of going "all in" are simply too great to resist. As the old saw goes, "there's no honor among thieves".
From my perspective, this is entirely fascinating. In every activity in life, there is always the 'game within the game'. We have gotten to the point where the players could hardly give a shit whether Tyler and others are onto them. They are now intently focused on each other as they quietly circle the room.
In every generation and in every corner of the globe, there is always a Mao, Stalin & Hitler waiting in the wings, biding their time, yet salivating at the chance to grab it all. Almost 500 years ago, men like Cortes & Pizzaro risked it all to seize for themselves alone practically the entire world's known wealth. Who out there today is just itching to pull the trigger?
Well, obviously, the PE are not united to a degree that hasn't been the case for perhaps over a century.
The problem is that people are becoming pissed-off and well-educated about the true state of affairs. The MSM must acknowledge at least some of the truth in order to avoid becoming irrelevant. Propaganda was easier when alternative media sources were limited in distribution.
Censorship is infeasible. The only effective censorship (web shutdown) would cause trillions of dollars in economic damages. And pervasive censorship usually provokes a violent backlash. When people can't express their feelings of anger with words, they turn to violence, demonstration, and terrorism. Such moves would degrade the quality of life for the PE and introduce unknown risks.
Of course there are now massive incentives to arguing very loudly and publicly against the central bank. Think of all the moneyed financial players that have large reserves of physical gold now. They could gain immeasurably from a collapse of the Fed, as long as civil order can be retained.
The primary risks for Mad Max don't come from average people or even survivalist nuts. It comes from the legacy governments. They need to be induced to abdicate peacefully.
That'll be tough to negotiate.
The installed puppet will most likely be Hillary; she's got more balls than anyone else; Obama has turned out to be just a teleprompter talking head ideologue; no wonder his college history is under wraps.
and bush`s college roommate was gay !!!!!!!! lol
B9K9:
mao, stalin, hitler, mussolini, they were all gangsters in state sponsored uniforms.
choosing from amongst the currently available criminal incarnations most likely to participate in a global smack-down, my money is on a euro/russian hard asset backed currency that completely cuts the cord to now worthless yankee dollars, and in the process, seals the fate of the despised anglo-uk crime cartel. as the chinese are the worlds largest pm producers they are certainly on board with the game plan as are the opec villains who fuel China's infrastructure .
as for the us of a, the bottom line lies with the military and where they come down when TSHTF. they take an oath to the constitution and not to any of the bought and paid for members of the plutocratic kleptocracy.
This ongoing HFT thing reminds me of a style I've seen on Ace of Spaces blog:
"Terrorist al-Quaida Mufstasa dies of heartburn and hellfire missile, but mostly hellfire missile"
"Stocks ramp due to HFT algos and Fed QE, but mostly Fed QE"
Given the flight out of equities by retail investors, what happens when all these POMO funded institutions are left holding all the chips?
They'll get bailed out again.
Great question, would love to know the answer...
They sell them to each other. Duh!
--------------------------------------------
Fellow Board members of Prosperous Citizens' Trust & Integrity Bank Co, I present our prop trading manager, Bill Lipshitz. He is here to report that he made us more money last quarter trading than we made on our entire loan portfolio in the previous four quarters! Mr. Lipshitz would like more money to continue this practice. What say you, members of the Board?
What about the risk, Mr. Lipshitz?
Compared to loaning money? Infinitely less.
What about Frank-Dodd Fin Reg?
Thanks for the reminder. Yes, we should send both of them another significant contribution for the loopholes. May I suggest another Irish cottage for Dodd, and maybe another young boy for Frank?
That all sounds reasonable enough. All in favor?
Ay!
Very well, we unanimously approve your request and suggestions, Mr. Lipshitz. How much money do you want us to get from the Fed? We can exchange some of our non-performing CRE junk...excuse me I mean a portfolio of CRE assets marked to their original acquisition value...for as much cash as you want.
------------------------------------------------
http://www.youtube.com/watch?v=dz50N2_tCCg&feature=related
Well, there must be the buyer of last resort and I suspect it is the Fed itself. They know if they can't reflate the economy, they will have no alternative but to kill the Dollar and whatever they replace it with, "the full faith and credit" of the US will not cut it any more. So, at least if they hold stakes in large multinational corporations, there will be some real assets to use to back a new currency. This is similar to Weimar Germany and the Rentenmark...
If they don't sell en masse, the fun continues unabated.
Ben must have looked at his calendar and seen an election coming in November.
what he said..They are GOING TO MAKE IT LOOK GOOD through the elections period.....
The Fed has a bigger gun than we do. And its full of liquidity bullets. Looks a bit like this...
http://www.youtube.com/watch?v=8RbL4PwTDsQ
delete
"And we just want to pump you up!"
Anyone know the POMO schedule for the next weeks?
Sept. 13 is the next Pomo sale, and the schedule for the next two weeks will be released that day +-2:30ET.
Their crimes are so easily proven - why doesnt the SEC and FBI show some courage and arrest these criminals? This is market manipulation and fraud.....Martha Stewert gets a stock tip and they have a grand ceremony arresting her - then these criminals manipulate entire market segments and the enforcement agencies run an...d hide like cowards...disgusting what our republic has become...no wonder a majority of the American people have no trust in the federal law enforcement, US Congress or the federal government....
Because the plan is and always has been to ensure the total destruction of it all, and roll out 1 world govt, 1 world currency. Everyone forgets the basics so easily!
"Because the plan is and always has been to ensure the total destruction of it all, and roll out 1 world govt, 1 world currency. Everyone forgets the basics so easily!"
I'm starting to really believe this. Banana Ben really wants to destroy the economy. He knows what he's doing. He knows that his policies will achieve to blow the entire economy sky high with an horrible force.
And that's probably what he's paid for.
central bankers are proving to be the scum of the earth
the biggest threat to humanity since the black plaque
I KNOW this is in fact the case because I once met an insider. He told me that the leader of their group controls the Fed "100%"! And nearly all other central banks in the world, too! The world-wide head of the cabal is a very close relative of his. George Soros and Warren Buffett are also deeply connected to this group.
Show us the criminal code stating that "liquidity enhancing measures" are declared as "criminal acts"...
MrTrader:
that law is in fact The Coinage Act of April 2, 1792:
Section 19: Penalty On Debasing The coin
And be it further enacted that
if any of the gold or silver coins which
shall be struck or coined at the said mint
shall be debased or made worse as to the
proportion of the fine gold or fine silver
therin contained, or shall be of less weight
or value than the same out to be pursuant to
the directions of this act, through the
default or with the connivance of any of the
officers or persons who shall be employed at
the said mint, for the purpose of profit or
gain, or otherwise with a fraudulent intent,
and if any of the said officers or persons
shall embezzle any of the metals which shall
at any time be committed to their charge for
the purpose of being coined, or any of the
coins which shall be struck or coined at the
said mint, every such officer or person who
shall commit any or either of the said
offenses, shall be deemed guilty of felony,
and shall suffer death.
http://www.constitution.org/uslaw/coinage1792.txt
What if redemption requests continue to come anyway? What if people really do need and/or want the money?
Research in Motion is the new "gold" up 2.5% today-
Pump up the jam, pump it up, pump it up... turn that shit up baby !
http://www.youtube.com/watch?v=1K7fL5s_1ac
Yea since Research in Motion has now proven to be an obsolete dinosaur with that 'Torch' crap phone, pump it to da moon!
The FED should also ship more money to pakistan.
http://www.geenstijl.nl/archives/images/advopakisgroot.html
http://www.geenstijl.nl/archives/images/flagbecue477.jpg
and what do we say to those nice people?
http://www.geenstijl.nl/archives/images/bedanktgrotesatan.jpg
When the tide will go out, we will finally see what this sick fucking joke they call FED and Treasury have really done to the US economy.
I don't believe the offical stats. According to USdebtclock, the US liabilities (including Medicare) are close to 110,338 billion dollars (no, you're not dreaming).
I would bet a bill on the fact that the real figures are even more horrible.
A world run amok. What happens when the fed stops buying stocks? Shit blows the fuck up, thats what happens. They eliminated the shorts, they eliminated the longs.
You just have to wonder if Ben is actually terrified doing whats he's doing. We can concede the guy may be doing all the wrong things but he just has to have an inkling of the damage he's doing and the corner he's backing himself into. I can imagine in his mind he's thinking all this is okay. He would literally have to have Corky Thatcher type mentality to beleive that. He's literally setting us up to be destroyed and he has to know that.
A world run amok. What happens when the fed stops buying stocks? Shit blows the fuck up, thats what happens. They eliminated the shorts, they eliminated the longs.
You just have to wonder if Ben is actually terrified doing whats he's doing. We can concede the guy may be doing all the wrong things but he just has to have an inkling of the damage he's doing and the corner he's backing himself into. I can imagine in his mind he's thinking all this is okay. He would literally have to have Corky Thatcher type mentality to beleive that. He's literally setting us up to be destroyed and he has to know that.
From watching his various testimony before congress etc., I think he is very conflicted within. I personally feel he will blow his own brains out sooner or later..............
TD,
If you were the "government" and you were coming into the election season where would you put your money? Would you have a little German-style austerity and be disciplined? Nah, I reckon you'd put it into the stock market. Also, if you knew that Sep/Oct were historically bad months and that the "rally" since last year was likely to fizzle, I reckon you would put even MORE money into the stock market. These people may not have a clue what they're doing long term, but in the short term they don't care at all how deranged their decisions are, so long as the citizens and their brokerage/401k accounts look good coming into Nov. Only the MOST cynical person should trade the market, otherwise you'll spend all your time railing against how the government is running everything, which obviously they are, but really, who cares anymore?
Like all gobermint plans, this one too will be myopic and fail over the long-term. The sheeple will see the market going up while their suffering increases - raising class divisions, furthering the perception of the banksters willing on the back of the middle class. Like ZIRP - it sounds good until you really think about it...
If they would have had the same kinds of pumps like the FED has during the days of Katrina in New Orleans, the place would have been a desert after the levies broke :)
What exactly is the Fed policy related to foreclosure? or related to disposal of temporary real estate holdings?
I won't hold my breath waiting for those disclosures.
And they would not have arrested NASDAQ Chairman Bernie Madoff as long as he kept making his payments to the synagogue...
http://jta.org/news/article/2008/12/14/1001530/madoff-scandal-rocks-jewish-philanthropic-world
This is becaase the recipients of Madoff's fraud were also connected via the synangogue to the same persons in charge with enforcement
Madoff whistleblower blasts SEC
A fraud investigator told Congress that he'd warned the agency about Madoff'...s Ponzi scheme years ago. But his efforts went nowhere.
http://money.cnn.com/2009/02/04/news/newsmakers/madoff_whistleblower/See More
I thunk bennie boy thinks if he can just keep stocks up long anough then somehting knew will come along and take over uie a new tech bubble or housing bubble
he is deluded not even a green tech bubble can save us
the only growth is in the amount of bullshit
Maybe it's this simple:
With tax receipts falling, the Fed needs to ramp up its monetization efforts, especially with China bailing on us.
The big winners are retail. If they were redeeming their MF's and 401k's at "realistic values", they'd be getting 20-25% less. Instead they are bailing at these inflated levels.
Personally, I think this is great as the PD's and the Fed will be the only ones left holding the big bag of shit.
Thanks for the heads up. Now that shorting is no longer an option, I think you should change the name of this website to Jim Cramers infinity Hedge. What do you think? If you decide to use it, I get 50% finders fee.
Its not going to matter. The foundation is made of sand and is crumbling. After all, huge up days are a trademark of a BEAR market.
so lets get this straight
while everyone else i n nor mal society has to work hard and produce somehting for little reward these c*nts get given money created out of this air,
specul,ate ohn the markets , drivve it up sell at profit and then get millions for it
they have a money machine while we all slave away that worker ants
utterly sick
Not only that. The real labor money you pay in taxes taken from the already small amount you make is used by the Treasury to pay interest to the Federal Reserve Cartel banks that simply created "money" to buy the treasuries. What an awesome world.
Clinton Admin aka Geithner Summers, at the helm so some payback is expected. Time for Obama to call in some favors to help the Dems.
This will help the Dems a lot if they can point to a rising stock market and say things are finally turning.
Also the more house minority leader John Boehner spouts off about removing Geither the more the NY Fed will push up the market. Just need to get this contract roll over out of the way.
If the ECB is a 'hedge-fund on steroids' (W.Buiter)
the FED is inventing a category of its own
Where's the F*cking Black Swan already? Are the momos so smart to divert until Xmas rally time??? ACM may be right that a rather "simple surprise" can trigger the break to Spx1010 and through but on the other hand, this s*it may just last until after us worthy ZH'ers are dead and buried!
I guess the Adminstration should nationalize Furlough days to happen on the first monday of every month from now on. It will have the same effect as Labor Day for September where most of the intial claims number are not even included, the more states that estimate these numbers, the better everything seems to be. They should also have these furlough days coincide with sales tax free shopping so those people who are not working that day will have time to go to their local malls and shop for more clothes and eat more junk food.
The fight to avoid the neckline peril is becoming amusing and obviously displayed by the FEDs actions, Presidents jobs rampage, and now the Presidents requests to stop the Koran burning. Nah, he is not Muslim. Give me a break.
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Nice article thanks.
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