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Goldman Advises Clients To Front Run The Fed Via POMO

Tyler Durden's picture





 

After a few months of breaking down what the simplest trade in the world is, that would be frontrunning the Fed for the cheap seats, Zero Hedge is happy to advise our readers that finally Goldman Sachs itself has capitulated and is now indirectly telling its clients to frontrun Ben Bernanke via POMO. No complicated value investor nonsense, no pair trades, no cap structure arbitrage, no hedging, no levered beta plays. Buy ahead of POMO. Sell. Rinse. Repeat.

From a GS distribution to clients:

On the interplay between the FED and STOCKS: Since Sept 1 – when QE was becoming a mainstream focus – if you only owned S&P on days when the Fed conducted Open Market Operations (in US Treasuries), your cumulative return is over 11%.  in addition, 6 of the 7 times when S&P rallied 1% or more, OMO was conducted that day. this compares to a YTD return of 5.8%.  the point: you would have outperformed the market 2x by being long on just the 16 days when – this is the important part – you knew in advance that OMO was to be conducted. The market's performance on the 19 non-OMO days: +70bps.

And there you have it - the top in frontrunning the Federal Reserve is now in.

The most recent Fed POMO calendar is linked (there is one tomorrow). Frontrun away.

Oh, and Ben, your criminal organization will one day pay for making a complete manipulated travesty out of capital markets.

 


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Thu, 10/21/2010 - 19:23 | Link to Comment TheGreatPonzi
TheGreatPonzi's picture

This is disgusting. The FED and Golman marching hand in hand, as always.

Thu, 10/21/2010 - 19:41 | Link to Comment kato
kato's picture

don't balme it on Goldman. they are just stating the obvious for people like you who are stupid to otherwise see it for yourselves.

Thu, 10/21/2010 - 19:45 | Link to Comment TheGreatPonzi
TheGreatPonzi's picture

Go fuck yourself, stupid douchebag

Thu, 10/21/2010 - 19:53 | Link to Comment Bigger Dickus
Bigger Dickus's picture

You two should get a room.

Thu, 10/21/2010 - 21:02 | Link to Comment Chemba
Chemba's picture

what an insightful comment.  consistent with an ignorant populist trailer dweller

Thu, 10/21/2010 - 22:24 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

What's your problem with trailers?

Thu, 10/21/2010 - 23:49 | Link to Comment StychoKiller
StychoKiller's picture

What's everyone's problem with douchebags?  They serve a useful purpose.  Call these jokers "tits on a boar", the point is more obvious that way.

Thu, 10/21/2010 - 22:45 | Link to Comment rocker
rocker's picture

What's insightful. Maybe the fact that this should put somebody in JAIL from Godman Shafts.

A crime worse than Insider Trading.  Called "Collusion."  Who Signs Off Quarterly. Lord Blankfein ???

Thu, 10/21/2010 - 23:40 | Link to Comment the rookie cynic
the rookie cynic's picture

Add racketeering, fraud, and treason.

Thu, 10/21/2010 - 19:51 | Link to Comment BlackThought
BlackThought's picture

LOL

Fri, 10/22/2010 - 09:13 | Link to Comment outernational
outernational's picture

my experience doing the opposite of what GS recommends has done me very well in the last 3 years...

 

Thu, 10/21/2010 - 19:24 | Link to Comment EscapeKey
EscapeKey's picture

Right, so that means this avenue is officially tapped.

What will the Fed resort to now - emergency, unannounced POMOps?

Thu, 10/21/2010 - 19:29 | Link to Comment dlmaniac
dlmaniac's picture

All signs continue to point to a modern day rotten Rome empire collapse.

Thu, 10/21/2010 - 20:31 | Link to Comment espirit
espirit's picture

Don't forget we have the reverse repo's, which are not on Pomo days, are they?

Need a schedule for the RR days, a strategy for when they occur on the same day (don't laugh yet), and a way to play the inverse (GS strategy).

OK, laugh-or-cry.

Thu, 10/21/2010 - 22:58 | Link to Comment rocker
rocker's picture

I like the way you think.

Thu, 10/21/2010 - 21:06 | Link to Comment Ras Bongo
Ras Bongo's picture

Now that GS has called the top, primary dealers will use FED cash to short the market from now. That is what will happen!

Thu, 10/21/2010 - 19:25 | Link to Comment Ratscam
Thu, 10/21/2010 - 19:29 | Link to Comment Rodent Freikorps
Rodent Freikorps's picture

THE AGONIST - Business Suits and Combat Boots (OFFICIAL VIDEO)

 

http://www.youtube.com/watch?v=pZo4bOZf3B4

 

Thu, 10/21/2010 - 19:32 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

It just fuckin pisses me off.

Sat, 10/23/2010 - 05:23 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

Fred Zwicky would describe these guys as "Spherical Bastards" as they are bastards any which way you look at them.

Although they use the hyperbolic trajectory of compound interest to completly fuck with decent people who believe in honouring their contracts.

If debt could describe a spherical trajectory not unlike their morals we would have little problem with these lowlifes.

 

 www.­dynamical-­systems.­org/­zwicky/­Zwicky-­e.­html  

 

Thu, 10/21/2010 - 19:37 | Link to Comment bada boom
bada boom's picture

FUGS!

Thu, 10/21/2010 - 19:40 | Link to Comment obamaphobe
obamaphobe's picture

time to fade the pomo...

Thu, 10/21/2010 - 19:40 | Link to Comment Gen X Gen Y Hybrid
Gen X Gen Y Hybrid's picture

Sweet. So a crash is finally coming now.

Thu, 10/21/2010 - 20:12 | Link to Comment Sam Clemons
Sam Clemons's picture

Yep, once everyone knows what is happening, its no longer useful.  Gold-bugs suspected for years that the Fed would be forced to monetize debt.  Which is why I think everything has reached a near-term top.

Thu, 10/21/2010 - 19:43 | Link to Comment Orly
Orly's picture

The effects of POMO are like a narcotic drug.  The more you take, the less they work, so you take more until it doesn't work at all.

The effects of Swiss currency intervention are similar.  The Japanese, the same.  They have earned their lessons (but the Japanese will "intervene" nonetheless on 15 November, 2010, at 0130 ET...).

Mayhaps Goldman knows such stuff and is actually setting their clients up with their "fix" but the effects get less and less each time, with the "bummer" buzz lasting longer and longer.  Now Goldman says to take the POMO pill?  Awful suspicious.

It wouldn't surprise me if the next ramp off the POMO lasts for fifteen minutes, only to have the markets tank thereafter.

This is just more sucker bait.  Don't bite.

:D

 

P.S.  Speaking of Goldman, get long EURCHF after the end of next week.  You'll be glad you did.

Thu, 10/21/2010 - 19:45 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

While ya can blast 20 blunts don't down 20 martinis!

Thu, 10/21/2010 - 19:47 | Link to Comment f16hoser
f16hoser's picture

I agree! I've been out of the S&P for months. When I see 8000 Dow and 800 S&P I'll get back in. Too many variables going on right now sprinkled with midterm elections. If Democrats do as bad as everyone thinks, our lame duck Congress/President will do horrible things by years end and markets don't like that. Buy Gold/Silver bullion/ETF's and ride this one out. JMO

 

Hoser

Thu, 10/21/2010 - 19:58 | Link to Comment rosiescenario
rosiescenario's picture

...when one is "doing God's work" then normal, socially accepted mores no longer need apply. Yes, bait is the right description.

Thu, 10/21/2010 - 21:27 | Link to Comment -1Delta
-1Delta's picture

Sucker bait.

Thu, 10/21/2010 - 22:29 | Link to Comment AccreditedEYE
AccreditedEYE's picture

Orly! Are you buying UNG into this weakness? (or UNL)

Thu, 10/21/2010 - 23:01 | Link to Comment Orly
Orly's picture

Buy and hold UNG until the cows come home.  This is a twenty-five year, dare I say, "investment."

Thu, 10/21/2010 - 19:43 | Link to Comment ThisIsBob
ThisIsBob's picture

What everybody knows apparently is worth knowing.

Thu, 10/21/2010 - 19:43 | Link to Comment Boston Wealth
Boston Wealth's picture

The most lucrative POMO type is tomorrow...

http://bostonwealth.blogspot.com/2010/10/is-fed-boosting-stock-markets-n...

The most impact seemed to be with Coupon Purchases (listed as "Outright Treasury Coupon Purchase" on the Fed's website). And the most positive of all were large Coupon Purchases – if the operation was greater than $3.5 billion on those days, a month later, the S&P 500 was positive 89% of the time (33 out of 37 days) with a median return of +3.4%.

Thu, 10/21/2010 - 23:12 | Link to Comment rocker
rocker's picture

Thank You Very Much. Advantage to ZH followers.

Thu, 10/21/2010 - 19:45 | Link to Comment naufalsanaullah
naufalsanaullah's picture

one minute GS is "screwing over" its clients, the next you're quoting Hatzius's "second-half slowdown" as gospel.

so which is it?

i'd advise against fading the pomo move. everyone and their mother (including bill gross's) knows 10yr yields at 2.5% makes zero sense. but front-running synthetic, albeit temporary, demand from the fed is a good trade. as long as you're the one dumping the bonds to the fed when they buy.

same way, get long risk ahead of pomo and sell into close tomorrow. the market hasn't discounted pomo buying because the fed will always increase liquidity from the point at which it is at at the time.

Thu, 10/21/2010 - 19:58 | Link to Comment Tyler Durden
Tyler Durden's picture

Hatzius certainly deserves credit for being the first on all of Wall Street to switch his view when it was merited (if 18 months overdue). Just as Goldman deserves credit for top ticking the EUR and Gold with Patek Phillipe precision.

And you are absolutely right, there are always greater fools who will do the easiest thing and trade alongside the Fed, as they are too lazy to do their own homework on how to properly hedge for the moment when the Fed and the great unwashed masses no longer are the marginal force.

You are also totally right that the 10 yr is a joke at 2.5%. When the Fed buys every single bond outstanding in one year the 10 yr will be trading at the discount rate.

As to your last point that the market's stupidity discounting mechanism is broken - you are spot on. However, if you are saying there is no diminishing return on infinite liquidity (and thus debt), we will take the other side any day. So will gold.

 

Thu, 10/21/2010 - 20:02 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

"When the Fed buys every single bond outstanding in one year the 10 yr will be trading at the discount rate. "

 

And the Fed will be the only bid

Thu, 10/21/2010 - 20:21 | Link to Comment naufalsanaullah
naufalsanaullah's picture

top-ticking gold? we'll see if gold isn't above 1650/oz on oct 12, 2011. my guess is it definitely will be.

gs, like every other bank, probably pulls a bit of shenanigans regarding clients in the timing of their calls, but not by top-ticking markets they call long, but rather advising long-term buys at short-term overbought highs.

the fx team has been absolutely wrong about euro, but their repeatedly highest conviction call was to stay long audcad after pushing the buy in aug if i remember, 700 pips ago.

my point is, there's no screw-the-client universality present in the data.

and the greater-fools problem doesn't apply to pomo-driven risk-on because it is a matter of time arbitrage. the fed can be your greater fool (in the context of bonds) and you know exactly WHEN it will be buying. in regards to risk assets, again the timing is already given to you via the fed's pomo schedule.

we'll see if the 10yr gets below 2% anytime soon. by the time the fed is buying every bond outstanding, like you say, it will no longer be the marginal force. post-qe discounting, yields are going to rise. you're the one who pointed out the abysmal 30yr auction the other day. steepener trade is back on in the back-end (eg 10s30s) and it's going to spend the next few years creeping down the curve.

Thu, 10/21/2010 - 20:45 | Link to Comment Tyler Durden
Tyler Durden's picture

They certainly top-ticked gold in the time frame 95% of "investors" trade these days which is 168 hours at most.

The 10s30s is only so steep as to provoke the Fed to start buying the long-end. The same way the USDJPY is at record lows to incite the BOJ into action again and again. There are only $500 billion in 10 year plus bonds available. Unless the Fed wants a complete catastrophe and have an average duration of 2 years it will have to buy the available bonds soon (post SOMA adjustment).

As for the Fed's time arbitrage, this is precisely what the Fed, and even the banks, are trying to avoid: being seen as an object of frontrunning. Which is why unless they shock everyone, and kill the market on November 3 by not announcing QE2, the Fed effectively signs its own suicide release form.

The whole point here is that the Fed needs to show it no longer can be front run by something as simplistic as a financial blog or even a Goldman Sachs letter to clients. Unless it can pull it off it has lost all credibility.

As for Goldman's top 9 trades of 2010... take you time and get back to me on how many of them are currently profitable.

Thu, 10/21/2010 - 21:45 | Link to Comment naufalsanaullah
naufalsanaullah's picture

regardless of the prevailing timeframe of choice for investors these days, the timeframe for the gold thesis presented by gs was 12mo.

regarding long bonds, fed's marginal impact is quickly decreasing. buying further up the yield curve brings issues of sovereign creditworthiness that, although probably won't cause any apocalyptic rises in long yields due to tsy liquidations (i'd like to see china/japan pull off a run on ust's without committing economic suicide well before any effects manifest), will have a very damaging impact politically regarding deficit spending, especially in this new wave of austerity demands.

qe was to recapitalize banking system. inflation, GDP growth, etc will all come once IOER is lowered (which won't occur until bernanke/geithner are "satisfied" with bank capitalization levels). you can't push on a string but you can turn that string into a steel rod overnight by eliminating the risk-free basis, causing velocity to accelerate.

i agree the fed needs to pull a rabbit out of its hat soon, but i doubt it will come in the form of not announcing qe2. first of all, from the fed's eyes, what is so bad about bringing the entire market to go lower the treasury's cost of borrowing and increase american corporations' market capitalizations? more importantly, the shock & awe is to address confidence crises, which is not the issue at hand. the issue is the lack of effect of monetary policy on the real economy, as deflation risk reigns supreme and unemployment is going nowhere. unemployment can tick up in the near-term via more spending (which i'm opposed to and question the sustainability of any labor increases resulting) but the fed is signing its own suicide form if it goes long bonds then. as such, the rabbit under shalom bernanke's yarmulke will likely come in the form of finally addressing the money velocity issue by eliminating IOER before shrinking the fed's balance sheet, effectively turning hundreds of billions of digital reserves into currency in circulation overnight. that sets up rate hike potentials as well eventually. it's all inflationary, but it'll be better than the rest of the world, due to the fact that the fed is merely abusing reserve currency privileges that other CBs unfortunately cannot.

gs's top trades of 2010, long gold call, and fx calls are all from different desks and teams. john noyce was pretty much spot-on on his short euro and long bond calls over the summer and then again with his long euro call later in the summer. not saying gs is worth listening to or frontrunning (in fact i'd typically take the other side of their trade), just saying again that it's not as simple as you make it out to be.

Fri, 10/22/2010 - 02:42 | Link to Comment RecklessMonkeys
RecklessMonkeys's picture

 

The whole point here is that the Fed needs to show it no longer can be front run by something as simplistic as a financial blog or even a Goldman Sachs


Perhaps the Fed wants to be front run. Why else would they publish the purchase dates?

The front runners may well be doing all the heavy lifting while the PD's keep cash in reserve as plunge protection. The mere perception that a market can't fall is enough for it to rise.

 

Problem will be when the selloffs get more dramatic. Maybe GS have figured out that QE 2 will only be QE Lite++. That is, a short term disappointment. Even so, that's a great time to cover your short gold positions.

 

There simply has to be QE coming. I suspect it will take the form of multiple ongoing announcements - QE(N) - of a lazy half a Trillion, rather than bazooka fire.

What better way to boil a frog?

 

And will each purchase date still be published?

Furthermore - are GS now simply looking to accentuate the POMO effect?

 

Are the Fed and Co creating a reality out of perception?

 

Is Zero Hedge being gamed by the Fed?

 

Thu, 10/21/2010 - 20:16 | Link to Comment naufalsanaullah
naufalsanaullah's picture

ps don't get me wrong, i'm not a prototypical perpetual bond bear myopically focused solely on debt/GDP ratios. i was pushing long bond theses this past spring and early summer in fact.

additionally, i'm no delusionary regarding wall street shenanigans. my point isn't to defend gs so much as to question whether the sensationalism is really warranted. the zero hedge basement army seems to love it though, and i guess it's a fresh break from the other side of the fence.

Thu, 10/21/2010 - 20:46 | Link to Comment Tyler Durden
Tyler Durden's picture

The sensationalism as you call it is there to force people to think, and hopefully realize that ths market is nothing like what capital markets were before the Fed become the dominant force in every asset class. But that is to be expected when the alternative is a global reset.

You are more than welcome to trade alongside Goldman. Just don't go crying to them hoping they will execute your order when you most need them to.

Thu, 10/21/2010 - 21:34 | Link to Comment FOC 1183
FOC 1183's picture

I had been in the business all of 3 days in the late 80's as a market maker on the curb (AMEX) in DEC (Digital Equipment). 'Bobby' the Goldman broker walks into the crowd willing to pay a half above theoretical for 300 jan 60 puts.  'Sold' I say, wondering why no one else in the crowd would want to do it.  The stock was halted before we finished writing the tickets (no chance to call my FOC broker on the NYSE for a short to get me delta neutral).  They announced a huge EPS miss and the stock opened $16 lower.

I've had a great (read fortunate) career generating positive returns in19/20 years in zero-sum markets.  It's not sour grapes when I say that Goldman is only successful by trading on inside info and flat out breaking the rules.  They have intelligent analysts, but the firm itself is constantly trading against them, as well as their own clients.  Everyone who has been on the floor or in the business long enough knows it.

John Lohman

PS Tyler: you're right - "it is all a lie at the end of the day".  Now if I can only pass that fucking captcha

Thu, 10/21/2010 - 21:54 | Link to Comment naufalsanaullah
naufalsanaullah's picture

inside info in the 80s.

using flow data to complement their own trading ideas now.

the shenanigans may be subtler, but yes they do still exist.

Thu, 10/21/2010 - 22:24 | Link to Comment FOC 1183
FOC 1183's picture

Of course it's different now.  We're all 'upstairs' and trading screens as we have been for 15 years.  But the point is that they're trading against their own CLIENTS by using their own CLIENT'S order flow (as Kevin Byrne says "same as it ever was").

Repeat: great analysis to the clients (which is already factored into the market by Tudor and Soros) but trade our own capital purely on front-running client order flow and inside info.  The only reason I'm posting is that Tyler is dead right: when Goldman puts this out to clients, the fix is in.  we can all begin to short POMO days. I hate putting stuff like this in print (because the market will always prove you worng), but at least I don't have to pass another captcha

Fri, 10/22/2010 - 02:20 | Link to Comment Nihilarian
Nihilarian's picture

when Goldman puts this out to clients, the fix is in.  we can all begin to short POMO days.

Bingo.

Thu, 10/21/2010 - 21:52 | Link to Comment naufalsanaullah
naufalsanaullah's picture

the sensationalism doesn't force people to think, it gives the sheep a wool blanket under which to hide.

like it or not, much of your audience is a demographic that comes to zh for reinforcement of their preexisting conceptions, not to come to new realizations (which is what zh helped me do, incidentally-- for which i'm grateful). this isn't your fault obviously (the merits of opening ZH up to more of a message board/forum commenter format is another argument for another day) but let's not be disingenuous here.

you won't catch me dead trading alongside goldman or using them to execute orders, but i'll bet you (regardless of your disclaimers) more than a few ZH readers are using your content to feed their own self-delusions that their FAZ holdings will eventually pay off big.

Thu, 10/21/2010 - 22:31 | Link to Comment Tyler Durden
Tyler Durden's picture

W/r/t FAZ, there were those who thought that €1000 OTM calls in VOW GR were delusional. They were proven wrong. That bandwagon was nothing compared to the liquidity bandwagon created by the Fed. Furthermore, you forgot to add that Zero Hedge does not have the world's biggest FICC+Equity flow (and prop although now the PC term is client facing) trading desk in the world. As such, we collect exactly 0% commission on every trade (matched or otherwise), and are happy to share our unaxed views on pretty much anything. Unlike GS, whose opinion is merely to rile up the better bid (or, rarely, offer) and to use the broker of choice to transact (we are confident there is a FAZ 3 bullet pitch at 200 West). Which brings us to your demographic question - whose composition, to my surprise, would surprise you. It always eludes people that for every commentator there are 100-200 (half of which are institutional) readers who read in silence. As for your GS comment: that is also surprising - they do have the best bid/offers in the business. But of course the give up is a little bit of frontrunning (assuming you are big enough... or not, as long as you have a retirement account).

And to your previous comment, we are always in awe by people who can time market inflection points, since we can not. Especially those of the variety when the majority realizes that there is a $3.5-4 trillion (yes, that part of the QE1, Lite, and 2 has been priced in) bid by Ben Bernanke that supports risk. And at last check that was just about 30% of the total market cap.

Thu, 10/21/2010 - 23:00 | Link to Comment macholatte
macholatte's picture

Tyler and Naufal, I want to thank you for the discussion and exchange of ideas.

Discourse is fleeting, but junk mail is forever.
Joe Bob Briggs

 

 

Thu, 10/21/2010 - 23:26 | Link to Comment FOC 1183
FOC 1183's picture

As much as I love the commenters here, don't confuse all of them with the total demographic of ZH readers.  I personally know lurkers who manage over $50 billion who read ZH, and I am but a zero compared to them.  Extrapolating that gets you to a number that begins with a T and has an s behind it

Thu, 10/21/2010 - 23:41 | Link to Comment rocker
rocker's picture

Up Yours Nuaf.......   I come to ZH for the contrary point of view.  And Tyler wins this hands down.. I  have provided help to him. Not your cause. And justly warned him of what past experience dictates. Yours, Nauf...,  is one of persuasion. Not ownership.

Fri, 10/22/2010 - 00:32 | Link to Comment frankTHE COIN
frankTHE COIN's picture

Amaranth and Mother Rock would still be Hedge funds today if they followed the information flow from Zero Hedge World Headquarters.

Fri, 10/22/2010 - 01:59 | Link to Comment Kina
Kina's picture

wrong spot

Fri, 10/22/2010 - 02:03 | Link to Comment Kina
Kina's picture

like it or not, much of your audience is a demographic that comes to zh for reinforcement of their preexisting conceptions, not to come to new realizations

 

 

Little bit unfair. There are not many alternatives to the dross handed up by the MSM who mostly ape the same meme. People can watch and listen to the usual MSM prozac and not think for themselves or find somewhere contrarian and confrontational that will widen the view. ZeroHedge most certainly challenges the norm and the assumptions and doesn't polis coroporate or government turds. ZH is popular as it is the one place you can come for a non-complaint look at things. By definition the people who come here WILL be independent minded people more able to call BS when it is about. What many don't like about the commentors here is the confrontational way of challenging standard dross.

Fri, 10/22/2010 - 00:03 | Link to Comment the rookie cynic
the rookie cynic's picture

I am not a trader. I have a few minor investments. I'm not wealthy.  So take what I say with a grain of salt, but I've had it with these guys.

Bernanke, Paulson, Blankfein, and Geinthner, et. al. have wound the clock back to 1929. There's doing the exact same thing that wiped out the banks and the economy at that time: merging speculation with banking.

I wouldn't call a top of the POMO-bull at this point. Yes, Goldman Sachs is notorious for selling one side while shorting the other. But right now, these guys are still drunk on their own Kool-Aid. They're powering a little bull market right now, but it has nothing real under it.  No true accounting. No fundamentals. It's just a rip-off.

Go ahead and buy into this. But in my opinion, it's a sham-fest that's coming down. I don't know when, but it's got no legs.

Eventually real "capital" will realize it's a scam and get out (if they haven't already. Tyler has done a great job of showing the outflow from mutual funds and insider selling). The HFTs and algos will eventually fry their hard-drives. You will try to sell, but no one will be buying and unless you have a server on the floor of the NYSE, you won't have any way to get out.

Even if the DOW doesn't tank and goes to 20,000, it will have taken trillions of fresh FRNs to get it there, so in the end, what will you have gained? Nada.

Thu, 10/21/2010 - 19:47 | Link to Comment RobotTrader
RobotTrader's picture

Time to sell all risk assets?

And Fed front-running "havens" like bonds and precious metals.

Hey, didn't Goldman slap some outrageous price target on gold recently?

Didn't PIMCO just announce they were buying MBS?

Hey, might be time to dump EVERYTHING.

Thu, 10/21/2010 - 19:50 | Link to Comment naufalsanaullah
naufalsanaullah's picture

pimco is front running potential fed qe demand for mbs in response to the putback risk crisis (otherwise watch excess reserves balloon even more and money velocity plunge further as banks are even more undercapitalized than originally thought, including by bears)

Thu, 10/21/2010 - 20:05 | Link to Comment Rodent Freikorps
Rodent Freikorps's picture

The Crüxshadows - Deception

http://www.youtube.com/watch?v=qGjK6hKahU8

 

Thu, 10/21/2010 - 20:32 | Link to Comment Minion
Minion's picture

Prechter has been advising amateurs to go to cash, and traders to take a MAXIMUM LEVERAGED short position.  I can't believe you're now seeing the lights of the coming train - might be time to backtrack out of the tunnel?

Thu, 10/21/2010 - 20:37 | Link to Comment naufalsanaullah
naufalsanaullah's picture

prechter's lost his clients way more money (on a % basis) than gs has.

any money his clients made during the crash have been lost three times over since then.

Thu, 10/21/2010 - 23:53 | Link to Comment rocker
rocker's picture

Prechter runs a larger Ponzi Scam than GS. At least GS trades. Prechter admitting does Not.

But hey, he has ten things to buy to confirm he is a asshole. Enough said.

Warning, he has advised his readers to go short again as he did in February.

And to short silver as he did in February.  Get the whole view yet. Good Luck All.

Fri, 10/22/2010 - 05:28 | Link to Comment Phat Stax
Phat Stax's picture

Yes, his first short signal that is still in effect came in August of last year.  Great long-term vision; medium and short-term far less than .500.  His recent newsletter he admitted he was "off by a few months" in predicting the next great down move (try 6 mos. and counting).  His breeziness tells me he really is not in the business of forecasting for traders, but rather for writing books and articles.  Learned the hard way...

Thu, 10/21/2010 - 21:11 | Link to Comment nmewn
nmewn's picture

"Hey, might be time to dump EVERYTHING."

I'll take all the yellow stuff you want to dump...some have been waiting patiently ;-)

 

Thu, 10/21/2010 - 21:30 | Link to Comment -1Delta
-1Delta's picture

and there you have it. but im getting long the US dollar

Thu, 10/21/2010 - 23:45 | Link to Comment rocker
rocker's picture

You have been honest Robo. Without above advise, I closed everything today. Some with that dam it feeling.

But, I will sleep well. F... GS.

Thu, 10/21/2010 - 19:49 | Link to Comment treemagnet
treemagnet's picture

It all reverts to the mean....and that means down bitcheeeez!

Thu, 10/21/2010 - 19:47 | Link to Comment rosiescenario
rosiescenario's picture

Now to be extremely politically incorrect, as a former student of what went on in Germany prior to the rise of the Nazis, I must say that there are remarkable parallels now unfolding within the U.S.

I must wonder if, after the inevitable financial collapse ensues due to their actions, the Fed and their NYC minions will face severe repercussions from an angry and ungovernable U.S. public?

Thu, 10/21/2010 - 19:52 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Bringing up those damn French reperations again ?

Thu, 10/21/2010 - 22:10 | Link to Comment Cheyenne
Cheyenne's picture

I ask myself that every day, and think rather than face a well-armed and pissed off citizenry, the partners in Tim Geithner LLC will be long gone. Then we're gonna face ourselves, which ain't gonna be gibe well with mass pretensions.

But it beats the fuck out of now.

Thu, 10/21/2010 - 19:52 | Link to Comment doggis
doggis's picture

....and there you have it!!! FINALLY - GS speaks and IS the perfect contrarian indicator!! if they (GS) are telling there clients to go LONG equities on POMO days - you now know that it is time to go SHORT equities on POMO days........  

Thu, 10/21/2010 - 19:55 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

The true contrarian Goldy trade is to play them straight. Before dating on bread/milk the delivery guy would put the new items in the back but in locations where the housewives were sharp he'd put them in the front.

Thu, 10/21/2010 - 19:59 | Link to Comment Vampyroteuthis ...
Vampyroteuthis infernalis's picture

One thing that ZH has taught me was to do the opposite of what the squid tells its clients. Tomorrow will be a blood bath.

The world is a vampire.......

Thu, 10/21/2010 - 19:53 | Link to Comment treemagnet
treemagnet's picture

What'ya wanna bet that "net neutrality" has its red dot laser sight directly on the temporal lobe of zero hedge?  Fuck all socialists and long live ZH! 

Thu, 10/21/2010 - 19:55 | Link to Comment Bigger Dickus
Bigger Dickus's picture

Hold on, I thought Goldman had transferred its pumping operations to Kocksuckers, Kronies and Retards.

Thu, 10/21/2010 - 20:32 | Link to Comment treemagnet
treemagnet's picture

No, you're mistaken sir: all accounts have been transferred, please forward all correspondence to our legal representatives:  Dewey, Cheatam, and Howe.

Thu, 10/21/2010 - 20:03 | Link to Comment michigan independant
michigan independant's picture

Groups of the population at the expense of others.

 

This is, of course, the best that interventionism can attain when it does not hurt the interests of all groups. But while making the whole community poorer, it may still enrich some strata. Which groups belong to the latter class depends on the special data of each case. The idea which generated what is called qualitative credit control is to channel the additional credit in such a way as to concentrate the alleged blessings of credit expansion upon certain groups and to withhold them from other groups. The credits should not go to the stock exchange, it is argued, and should not make stock prices soar. They should rather benefit the "legitimate productive activity" of the processing industries, of mining, of legitimatce commerce," and, first of all, of farming. Other advocates of qualitative credit control want to prevent the additional credits from being used for investment in fixed capital and thus immobilized. They are to be used, instead, for the production of liquid goods. According to these plans the authorities give the banks concrete directions concerning the types of loans they should grant or are forbidden to grant. However, all such schemes are vain. Discrimination in lending is no substitute for checks placed on credit expansion, the only means that could really prevent a rise in stock exchange quotations and an expansion of investment in fixed capital. The mode in which the additional amount of credit finds its way into the loan market is only of secondary importance. What matters is that there is an inflow of newly created credit. If the banks grant more credits to the farmers, the farmers are in a position to repay loans received from other sources and to pay cash for their purchases. If they grant more credits to business as circulating capital, they free funds which were previously tied up for this use. In any case they create an abundance of disposable money for which its owners try to find the most profitable investment. Very promptly these funds find outlets in the stock exchange or in fixed investment. The notion that it is possible to pursue a credit expansion without making stock prices rise and fixed investment. Human Action Ludwig Von Mises

There is no free market anymore. Society is on a IV drip


Credit expansion is any Government's foremost tool in their struggle against the market economy. In their hands it is the magic wand designed to conjure awav the scarcity of

capital goods, to lower the rate of interest or to abolish it altogether, to finance lavish government spending, to expropriate the capitalists, to contrive everIasting booms. and to make-evervbody prosperous. The inescapable consequences of credit expansion are shown by the theory of the trade cycle

 

 

Thu, 10/21/2010 - 20:04 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Delenda est Carthago

Thu, 10/21/2010 - 20:17 | Link to Comment michigan independant
michigan independant's picture

"Cato the Censor says so," was the answer. "He says that two such cities as Rome and Carthage cannot long exist under the same sun. One must soon submit to the other. If Rome does not destroy Carthage, then Carthage will destroy Rome." "Then every Roman must join with Cato and cry, 'Delenda est Carthago!' "

Thu, 10/21/2010 - 20:09 | Link to Comment monopoly
monopoly's picture

I must admit benny and the shysters have worn me down. Not going to do any more trading. And I own only, Physical gold and silver, miners, NEM, GG, etc. and FAZ. The rest is cash.

This market has worn me out trying to trade between the lines, so just going to keep what I believe in. Am done with this crap. And I have been trading for over 15 years and investing for 30. Country just going to be flushed with a plunger before this is over.

ty Tyler and Zero Hedge

Fri, 10/22/2010 - 11:28 | Link to Comment Bryan
Bryan's picture

I'm pretty much in the same boat, monopoly.  I've been long SDS since $66 and refuse to dump the position until it's either profitable by at least 10% or it goes to $0.  This position is mostly a political statement for me that I don't trust the leadership of this country any more, and I feel that we should have allowed an economic 'reset' back in March '09 so that we could get back to real growth again.  Instead, powers that be decided they didn't want to face the pain of their stupid decisions of the past and decided to cover it up and put bandaids on the open wounds.  I say let them... maybe an economic collapse and revolution is what this country needs to purge the idiots from power?

Thu, 10/21/2010 - 20:10 | Link to Comment Drashta
Drashta's picture

They want buyers they can sell to. If you read it carefully they say this is what happened - not that they are advising that it will continue to happen and so you should do it now. If someone draws that conclusion and buys - they are buyers for Goldman sellers.

Thu, 10/21/2010 - 20:13 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

The only new twist today was the reverse repo action with the market sitting down like a good little doggie. Ball was tossed again in the last hour, go get the POMO Rover! Get it get it get it!

It makes for a more convincing simulacra. Maybe they are afraid of introducing MORAL HAZARD  :)

Be happy with your bone tomorrow and a nice pat on the head.

Or put differently, be happy you are enjoying this and not a waterboarding in the lovely Caribbean.

 

Thu, 10/21/2010 - 20:17 | Link to Comment rapacious rachel wants to know (not verified)
Thu, 10/21/2010 - 20:21 | Link to Comment Bearster
Bearster's picture

My theory is that if you want to manipulate a market, it takes increasing amounts of money the farther from the free-market price and the longer you want to hold it.

Exponentially increasing, not linearly increasing.  This is why even central banks can't manipulate the currency markets for long.  The day will come when they can't manipulate the stock market either.

Thu, 10/21/2010 - 20:28 | Link to Comment plocequ1
plocequ1's picture

When will that day come? Ive been hearing about this day since 2007. When?

Thu, 10/21/2010 - 20:21 | Link to Comment kaiserhoff
kaiserhoff's picture

Picking up nickels in front of the steam roller, and Goldman has my back.

How can I lose?

                                   /Homer Simpson channeling module off/

Thu, 10/21/2010 - 20:39 | Link to Comment plocequ1
plocequ1's picture

Does this mean ZH will list the stocks on the POMO chart of the day in the morning so we can buy them and make instant cash? Where do i sign up?

Thu, 10/21/2010 - 20:27 | Link to Comment Traveler-2
Traveler-2's picture

I live here in Topeka, Ks.  I moved here from California a few years ago to retire.  I say this so you all don't think I am writing from Iraq, as some have.

But as a native American, and at my retirement age, I have written this banana republic off.  At the same time, I am not going to roll over. 

I, for many years, in addition to my US stocks, have bought shares of really great Canadian stocks on the pink sheets.  Beginning in 2008, I lost everything in my US stocks, but not my Canadian stocks.  Now, I have fun and enjoy researching Canadian companies, mainly resource companies, finding good ones, and buying them on the pink sheets.  I have never been let down with the Canadian system yet, and have protected my income and my savings.

I know you all invest in the big companies (BAC, APPLE, etc) that Tyler directs his blog to, but if you are a middle class guy like me I never held those names.

I think that people need to adjust to the situation Americans find themselves in today, and if you believe in capitalism/free enterprise, you need to look to other countries which have not been so obviously corrupted. There are many emerging economies which provide opportunities.

Or, maybe, you all just want to sit around and pout?

Thu, 10/21/2010 - 20:31 | Link to Comment 10044
10044's picture

dude WTF, when did tyler say buy BAC and apple?

Thu, 10/21/2010 - 21:05 | Link to Comment treemagnet
treemagnet's picture

"As a Native American".......why is that necessary to mention?  Not once have I started a blog with "As a 42 year old white guy from norway".  And before any of you liberal fucks go all pc, just remember, Juan Williams is true, correct, and entitled to his opinion...(so am I)....(so are you)....of which I haven't stated mine....yet, you'd be surprised.

Thu, 10/21/2010 - 21:39 | Link to Comment oddjob
oddjob's picture

maybe next post we could hear about his tribal journey to bingo.

Thu, 10/21/2010 - 22:37 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Somewhere in Kenya a village is missing its idiot

Thu, 10/21/2010 - 21:55 | Link to Comment SamuelMaverick
SamuelMaverick's picture

+1. Well said.

Thu, 10/21/2010 - 20:30 | Link to Comment Minion
Minion's picture

Isn't goldman one of the PD's that does the pumping after getting paid by the FED......... and now they're advising their clients to front run their own manipulation?  Lol, memories of "fabulous fab" selling clients what he called CRAP in company emails.  :D

Fri, 10/22/2010 - 00:14 | Link to Comment the rookie cynic
the rookie cynic's picture

Yes... good point Minion.

Maybe PD suggests two functions:

1) p-rimary d-ealer

2) p-ump and d-umper

Thu, 10/21/2010 - 20:40 | Link to Comment monopoly
monopoly's picture

Well, I to am retired and am not pouting. Have a good life, was careful and lucky. I do not think Tyler tells us to buy anything. He gives us information for us to intelligently do with what we please. Any and all trades are up to us.

I do believe this Republic is sinking, which is sad, not for me but my daughter. I have never seen so much corruption, lying, stealing, greed and selfishiness in this country in all my years on this planet.

We are broke, bankrupt, and so few see it. Just boggles my mind. Tire of the crap I see every day, so just going to sit back with gold and enjoy. This site is an immense help.

Thu, 10/21/2010 - 21:12 | Link to Comment treemagnet
treemagnet's picture

Monopoly - I am just curious about you.  Not judging, but what type of pension do you receive - gov't, corp, state, city - you sound like a guy who only had to focus on his job and others had to do theirs, which included looking out for your retirement.  No offense, despite what you might infer, is intended.  Just really curious.....

Thu, 10/21/2010 - 21:21 | Link to Comment treemagnet
treemagnet's picture

Okay, just read my own post - doesn't read very nice.  Sorry, just always curious about the views of the baby boomer generation that paid a price, but got to ride the wave of a demographic that nobody will ever experience again - yet consistently deny any significance or relevance.  They act like AARP is nice and fair - acknowledge current system is fucked yet demand to be paid - "I'll be dead when the bill comes due kinda attitude".  Sorry, hate this but realize I'm not the only one.  Honesty ain't always easy to say in a PC kinda way.  For all I know, I owe you somewhere between nothing and everything.....

Thu, 10/21/2010 - 21:19 | Link to Comment Brokenarrow
Brokenarrow's picture

I agree. I am glad Im old----you dont need shades cause the future dont look that bright.

Thu, 10/21/2010 - 21:29 | Link to Comment treemagnet
treemagnet's picture

Brokenarrow - tell me more.  I'm always curious about your generation.  Its weird, older folks always seem to like me - I mean, all the time.  I think its because I appear very serious, I've never been able to hide my emotion.  One look at me, and you know my mood - usually focused on one thing, "dog and a bone" kinda thing.  Anyway, what do you see, what do you tell your loved ones, ?

Thu, 10/21/2010 - 20:46 | Link to Comment gkm
gkm's picture

Does Goldman Sucks only make money by fading the advice it gives to customers?  Check the call on ETH.  Changed from a Sell to a Neutral 2 weeks ago.  ETH is off 20% since then.

Thu, 10/21/2010 - 20:47 | Link to Comment Rob Jones
Rob Jones's picture

The Fed is holding a lot of MBS debt that it purchased from the banks. When interest payments or principal repayments (due to homeowner refis) come in to the Fed from this debt, it removes money from the system. If the Fed did nothing, the money supply would contract. So the Fed uses POMO inject this money back into the system via purchases of Treasury debt. But the overall effect is to keep the money supply constant.

These POMO operations are clearly having an immediate effect on the markets. But I think it is somewhat deceptive. Liquidity can be removed from the system (as described above) any day of the week. But it is only reinjected back into the system on POMO days. This allows the Fed to give people the impression that it is supporting the markets when it is actually doing nothing. The liquidity removal is invisible, but liquidity reinjection via POMO is very visible. The Fed makes a point of announcing POMO days well in advance. It is like a magician who by sleight of hand makes an object appear, seemingly out of nowhere.

Thu, 10/21/2010 - 20:48 | Link to Comment obamaphobe
obamaphobe's picture

There is $32B scheduled.  My guess is tomorrow is light as they as saving for the pre-election ramp.  Could be a big disappointment for those needing a full shot. 

Thu, 10/21/2010 - 20:52 | Link to Comment Atomizer
Atomizer's picture

Back when GS was getting pounded, their PR department unleashed two commercials.

Goldman Sachs - Heart & Focus

http://www.youtube.com/watch?v=3lIxJALaveQ

At 30 sec, you will see the subliminal message within the advertisement

Thu, 10/21/2010 - 21:11 | Link to Comment Brokenarrow
Brokenarrow's picture

When everyone knows the game?? Run

 

Do not get long ahead of tomorrows pomo.\

 

Its a trap.

Fri, 10/22/2010 - 04:05 | Link to Comment Central Wanker
Central Wanker's picture

Its a trap.

Indeed. Giant Squid has tried to make the stock market crash for some weeks now, but without success. This time they may well be successful.

If everyone is buying before POMO,  it means that everyone must also be selling after POMO. Just guess, what that means.

Thu, 10/21/2010 - 21:16 | Link to Comment Brokenarrow
Brokenarrow's picture

ZH called this right for the last two months

Thu, 10/21/2010 - 21:17 | Link to Comment abducens
abducens's picture

Will they let us know when they decide to sell?

Thu, 10/21/2010 - 21:29 | Link to Comment buzzsaw99
buzzsaw99's picture

if zh worked for the squid this probably wouldn't have come to light. or do they? :shivers:

Thu, 10/21/2010 - 22:47 | Link to Comment AccreditedEYE
AccreditedEYE's picture

Buzz, TD cleared this up a while ago... The Squid works for ZH. lol

Thu, 10/21/2010 - 22:49 | Link to Comment Tyler Durden
Tyler Durden's picture

Just shows you are not paying attention. We are all being LBOed by the Fed.

Thu, 10/21/2010 - 23:10 | Link to Comment AccreditedEYE
AccreditedEYE's picture

I remember how insulted you were that someone (I think it was Miles) had not even considered The Squid being a subsidiary of ZH. (This is probably about a month or so ago...) :)

Re FED: agreed.  AND when you're talking I always pay attention. Thank you for all that you do.

Thu, 10/21/2010 - 23:58 | Link to Comment rocker
rocker's picture

Thanks for all you do.  Enough said.

Sat, 10/23/2010 - 04:15 | Link to Comment jsutthoff@hotma...
jsutthoff@hotmail.com's picture

TD, I contacted Goldman on this quote.  They say they have no record of such commentary. Who sent you this?  Is their a underlying research report, maybe a PDF we could look at which gives details of how tehse results are generated?   Thanks

Thu, 10/21/2010 - 21:32 | Link to Comment FOC 1183
FOC 1183's picture

I had been in the business all of 3 days in the late 80's as a market maker on the curb (AMEX) in DEC (Digital Equipment). 'Bobby' the Goldman broker walks into the crowd willing to pay a half above theoretical for 300 jan 60 puts.  'Sold' I say, wondering why no one else in the crowd would want to do it.  The stock was halted before we finished writing the tickets (no chance to call my FOC broker on the NYSE for a short to get me delta neutral).  They announced a huge EPS miss and the stock opened $16 lower.

I've had a great (read fortunate) career generating positive returns in19/20 years in zero-sum markets.  It's not sour grapes when I say that Goldman is only successful by trading on inside info and flat out breaking the rules.  They have intelligent analysts, but the firm itself is constantly trading against them, as well as their own clients.  Everyone who has been on the floor or in the business long enough knows it.

John Lohman

PS Tyler: you're right - "it is all a lie at the end of the day".  Now if I can only pass that fucking captcha

Thu, 10/21/2010 - 21:39 | Link to Comment Atomizer
Atomizer's picture

Have a good time with link. Your setup for GS.

http://www.muckety.com/Query?name=Goldman+Sachs&prev=++Enter+a+name+of+a+person+and%2For+organization

Click on all business boxes. Notice UN & Carbon Trading buttons. Right click to acquire more info

Thu, 10/21/2010 - 21:58 | Link to Comment Attitude_Check
Attitude_Check's picture

Just a thought.  Could the FED be ready to take-down equities, after suckering in as many useful idiots as possible?  Will the FED withdraw liquidity rapidly and crash equities to simultaneously scare folks into treasuries and drop Gold, enabling JPM and others to unwind their short positions?

HMMMMMMM

Thu, 10/21/2010 - 22:32 | Link to Comment Cheyenne
Cheyenne's picture

Yes.

Fri, 10/22/2010 - 00:42 | Link to Comment pitz
pitz's picture

Suckering in?  Haven't you been paying attention to the other ZH posters constantly ranting about equity outflows?  How exactly are they 'suckering in' money?

The Fed's long-term enemy is the bond market, which is currently being given the kiss of death. 

Thu, 10/21/2010 - 22:06 | Link to Comment gimli
gimli's picture

I have just added crap to Lloyd's office ...

please leave feedback:

http://www.youtube.com/watch?v=BDCcClTNOUk

Thu, 10/21/2010 - 22:23 | Link to Comment prophet
prophet's picture

Sensational.

<<You guys are way to sharp to be hanging around in blogivion.>> 

I've been sensing and noting here and there that it does seem like "they" are getting ready to pull the plug and that if they do get the sharp drop it will give them cover for QE II throttle up.  How better to do it than on a POMO day?  Watch the dollar ever closer on those POMO days.

With the macro calendar the way it is, we could  see a series of low probability events over the next two weeks.

-profd

Thu, 10/21/2010 - 22:34 | Link to Comment trip nixon
trip nixon's picture

What if goldman isn't fading its own clients, but they have an understanding with the clients that the client should do the opposite of what the news release says? That way the public is seeing that and doing the opposite of the clients?

If Goldman came out and said "buy gold" when gold was about to head higher, then the clients would be facing an onslaught of retail buyers and get worse prices. If they understand to do the opposite, effectively the public is being faded by Goldman's clients.

Too complex?

Thu, 10/21/2010 - 23:19 | Link to Comment Bankster T Cubed
Bankster T Cubed's picture

goldman fucking sachs should change their name

to  Yo Bitch Mothafucka Goldman Sachs Mothafucka

Thu, 10/21/2010 - 23:56 | Link to Comment Milton Waddams
Milton Waddams's picture

In this case, Goldman is carrying the Fed's bags.

The goal of POMO and the subsequent threat of QE2 is to boost asset prices in an expectation that it will spark a positive feedback loop. The theory goes: higher asset prices produces a positive wealth effect which in turn induces an uptick in consumption prompting an increase in production and capital improvements which, in theory, generates hiring.

However it appears that only Wall Street is responding to POMO and threats of QE2 while most retail investors remain apathetic toward the financial markets. Enter Goldman, which is essentially saying "Hey guys, look at what we have discovered - you can make mo' money! mo' money! mo' money! by responding to the Fed's Pavlovian Bell. Get in and ahead of the money train game; if we are doing it, everyone is eventually going to be doing it as well."

It is simply a play on GREED and the FEAR of falling behind.

Fri, 10/22/2010 - 00:23 | Link to Comment StychoKiller
StychoKiller's picture

I was sorely tempted by greed this morning, seeing NetFlix trading up around $17/share, but the fear of being dismantled by the HFT robots kept me from getting back into the market -- are you LISTENING/READING, SEC??

Fri, 10/22/2010 - 00:16 | Link to Comment palmereldritch
palmereldritch's picture

 

pomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomoporno pomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomoporno pomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomoporno pomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomoporno pomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomoporno pomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomoporno pomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomoporno pomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomopornopomoporno

 

It's a fine line

 

Fri, 10/22/2010 - 02:21 | Link to Comment Kina
Kina's picture

Soros should short JPM and buy up gold and silver big.

Fri, 10/22/2010 - 03:29 | Link to Comment Central Wanker
Central Wanker's picture

Wow! Finally a trade everyone can make money with!

This is what I call Financial Innovation.

Fri, 10/22/2010 - 07:12 | Link to Comment tom
tom's picture

Well, ok, I've been taking the position that these "QE lite" POMOs weren't really such a big deal for stocks, and what really mattered was anticipation of QE2. Looks like I misunderestimated at least the short-term impact of the POMOs.

But I still say that if while announcing "QE lite" Ben had said, "and this is it, there will be no QE2", stocks woud be well down since then.

If these POMOs really are pumping significant money into stocks, and not just pumping very short-term air into the market on the days that POMOs are held, then that money has to be coming out of something else. These POMOs are not creating new money.

Some of the money's just Fed bailing itself out, so to speak. The Fed buys Treasuries that fund GSE payouts on guarantees of bad mortgages within MBS in the Fed's portfolio. Can't see how that transfers money into stocks.

Some of the money's just displacing big institutionals out of Treasuries and into MBS. The Fed buys Treasuries from primary dealer, primary dealer buys Treasuries from Pimco, Pimco buys new MBS that fund new or refinanced mortgages that pay off the old mortgages within MBS in the Fed's portfolio. Can't see how that transfers money into stocks either.

The only portion of these POMOs that can really be putting money into stocks is the money that's coming out of the household sector. John Doe cash-in refis his Fed-mortgaged house, or buys somebody else's Fed-mortgaged house for cash, or puts a larger down payment on a Fed-mortgaged house than it has equity, Fed uses the repayment to buy Treasuries from primary dealer, primary dealer buys Treasuries from somebody else, who buys other stuff, partly stocks, partly corporate bonds, partly foreign, partly gold - what have you.

If that's really happening on a market-moving scale, then there has to be an equally big drain out of the household sector's cash savings. And it means that households are increasing their investments into housing, in hopes of a rebound. Good luck with that, Mr Doe.

Wed, 02/23/2011 - 02:09 | Link to Comment shawnlee
shawnlee's picture

<>

I've been sensing and noting here and there that it does seem like "they" are getting ready to pull the plug and that if they do get the sharp drop it will give them cover for QE II throttle up. How better to do it than on a POMO day? Watch the dollar ever closer on those POMO days.

With the macro calendar the way it is, we could see a series of low probability events over the next two weeks.
its really sensational.
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Wed, 04/20/2011 - 05:44 | Link to Comment shawnlee
shawnlee's picture

I've been sensing and noting here and there that it does seem like "they" are getting ready to pull the plug and that if they do get the sharp drop it will give them cover for QE II throttle up. How better to do it than on a POMO day? Watch the dollar ever closer on those POMO days. ccna voice practice exam \ ccna wireless practice exam \ ccnp practice exam \ ccnp security practice exam \ ccnp voice practice exam \ ccnp wireless practice exam \ ccsp practice exam \ cisco practice exam \ cissp practice exam \ citrix practice exam \ comptia practice exam \ crm practice exam

Mon, 04/25/2011 - 07:15 | Link to Comment george22
george22's picture

They (banks and Congress) put a gun to FASB's head and got themselves bonuses from 2008 - 2016 while standing on insolvent rubble. We're not even forcing them to recap their own insolvent banks under a shadow old FASB regime, so that they may once again pay themselves bonuses when they're solvent under the old FASBOxygen Sensor

Mon, 05/23/2011 - 00:01 | Link to Comment kummar
kummar's picture

That explains a lot, thanks Tyler, that's one of the most interesting pieces I've read recently on ZH or elsewhere. From that you can pretty much see the character of the next criris as the moral hazard and imbalances are still there.That explains a lot, thanks Tyler, that's one of the most interesting pieces I've read recently on ZH or elsewhere. From that you can pretty much see the character of the next criris as the moral hazard and imbalances are still theretestking SSCP
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Mon, 05/30/2011 - 06:31 | Link to Comment kummar
kummar's picture

After a few months of breaking down what the simplest trade in the world is, that would be frontrunning the Fed for the cheap seats, Zero Hedge is happy to advise our readers that finally Goldman Sachs itself has capitulated and is now indirectly telling its clients to frontrun Ben Bernanke via POMO. No complicated value investor nonsense, no pair trades, no cap structure arbitrage, no hedging, no levered beta plays. Buy ahead of POMO. Sell. Rinse. Repeatpass4sure 77-881 \ pass4sure 98-361 \ pass4sure 70-431 \ pass4sure 70-513 \ pass4sure 77-888 \ pass4sure 98-363 \ pass4sure 70-162 \ pass4sure 70-669 \ pass4sure 70-693 \ pass4sure 70-443

Tue, 05/31/2011 - 00:11 | Link to Comment kummar
kummar's picture

They (banks and Congress) put a gun to FASB's head and got themselves bonuses from 2008 - 2016 while standing on insolvent rubble. We're not even forcing them to recap their own insolvent banks under a shadow old FASB regime, so that they may once again pay themselves bonuses when they're solvent under the old FAS

642-647 \ Pass4sure 642-165 \ 642-067 \ Pass4sure 1z0-051 \ Pass4sure 310-065 \ Pass4sure 642-504 \ Pass4sure 642-655 \ Pass4sure 650-195 \ Pass4sure HP0-P14 \ 642-874 \ Pass4sure 642-971 \ Pass4sure 310-200

Tue, 07/12/2011 - 05:18 | Link to Comment john310
john310's picture

Since the 1960s, meditation has been the focus of increasing scientific research of uneven rigor and quality. In over 1,000 published research studies, various methods of meditation have been linked to changes in metabolism, blood pressure, brain activation, and other bodily processes 640-721 dumps//646-364 dumps//642-437 dumps//650-393 dumps//70-432 dumps//646-230 dumps//HP0-Y30 dumps//642-374 dumps/70-646 dumps//646-578 dumps

Tue, 08/16/2011 - 01:37 | Link to Comment newdeals2
newdeals2's picture

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