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Here Comes The Fed's POMO Liquidity
The Fed has just released the 29 bonds maturing between 2013 and 2014 eligible for monetization by the 11am deadline. And since the Fed has been purchasing notional way ahead of schedule, it may have far less dry powder to reliquify the market: today's auction will likely come at around $2 billion. Anything above that would mean that the Fed is monetizing about $35-40 billion a month, well beyond what it had telegraphed previously, and in essence is undergoing a real QE2 process.
The only question is whether the banks will use the new cash to buy stocks in today's smack down, or will they push the 10 Year further inside the 250 bps it was spotted last. The buyback will be complete at 11:00 am at which point we will discuss if Morgan Stanley continues to shine in its Fed frontrunning predictions.
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Who will Mr Market listen to on Friday? Helo Ben's announcement of potential full on QE2 or GDP revision down to 1%?
They killed deflation. You bastards!
There was not much doubt. It is ominous to speak about deflation but with the power to monetize any asset it chooses, the CB has a lot of inflationary bullets to kill deflation if their need is high enough.
Tachycardia is a condition where the heart just sits there and quivers ... instead of beating. It's also known as fibrilation.
I note this because as the Fed applies the 'shocks' to get the economic pump beating, all that is happening is shock, fibrilate, shock, fibrilate ... rinse repeat.
You cannot solve a debt crisis through additional debt.
At some point, there must be a fundemental realization that either the patient is dead and gone or that taking on the status quo and correcting the underlying conditions is the only cure.
Sorry if this is ruining some institutional investors day, month, quarter, year, 2 year, 3 year or 10 year performance.
Ultimately I agreed some form of debt restructuring will be the end game, in the meantime FED will try to maintain status quo - inflate or die, depreciate USD or die - only play they have. Buy GC.
Get ready, the hyperinflation cycle is about to begin as Bernanke destroys the currency. Stocks will continue to crash. The scenario is setting up just as described. Within 3-6 months, hyperinflation will be ready to rear its ugly head.
Gotta tell you Tyler. Zerohedge blows the other sites away with its concise reporting and no-filler-prose analysis. You are THE antidote.
Where have you been all my life???
But your math captchas are a bit trying for my aging senior citizen brain!!!!
Get help from the grandson or granddaughter. Works every time and they get the benfit of that warm fuzzy feeling inside when they've helped out old fart Grandad once again. You get logged on faster and they get to snicker about Depends. Win win. :>)
there's chatter that jpm and ms are selling the spoos
Come on baby, we need more juice! This market is silly, down on low volume so the big boys can scoop up more shares and look like fucking heroes next month.
No volume?!? What the heck were you looking at Leo?
It's official - you're delusional. But what is most important is what you didn't say - you're about to lose your shirt if you're posting about how badly you want the market to go up.
Sorry, looking at solars...NO VOLUME! TSL now green!
You make me lol out loud, Leo.
Well played!
Starting to appreciate you Leo :-) I may not share all your ideas but you bring sunshine in my grey cubicle
Yes 1055 on ES is silly. Sell it, Leo, please....
Sold @ a profit:
Nice outperformance. In a wolf market, got to take the money when you see the money.
goled bitchez just took a big spike $20 straight up
As opposed to spiking sideways?
Given the time of the month (options expiry) gold and silver are more likely to spike down than up. A significant, unabateable spike up at this time is likely to drive right through the heart of JPM and the Fed.
Doesn't really matter WRT the banks use of the money. I think of bonds as part of the large swimming pool of liquidity. Eventually others will see value and reallocate to stocks.
Barring a great lasting depression globally (not just USA), I view the liquidity situation (especially bonds relative to stocks) as an energy analysis scenario in which tremendous potential energy is building up (liquidity piled into bonds) to be transferred to kinetic (stocks). We only need a catalyst (spark). That could be a major QE program...slightly better economic stats, failure of global growth to go negative, the Prez to allow some of the Bush cuts to continue, etc. This could easily create an environment for a intermediate term (weeks) rally.
Of course, longer term fundamentals are less that rosy but stock values relative to bonds and central bank policy have more than priced things in with the absolute insanity of 2.5% 10 yr yields. When I look at monthly charts of wheat, crude, natural gas, silver, copper, etc, I just don't see the deflationary trend. In fact, my weekly charts of almost every major commodity with the sole exceptions being NG and CL are in uptrends.
This is bullshit. What the fuck good is QE 2? They are buying fucking the S&P. This is madness. I am so sick of this ramp job bullshit.
Bullshit or not, reflate and inflate is their official policy. How do you play it? Just look at the economic releases the day before, have some powder available, buy when bad news hits the wire and sell when POMO takes effect.
Re-liquify
Have to ponder that phrase.
Fed bought $1.3 Billion
The Fed has UNLIMITED 'dry powder' as their Federal Reserve Debit Note (US Dollar) product can be electronically 'printed' in unlimited supply. This is the 'magic' of a FIAT system.
How about ZERO RESERVE bankstering per Bernanke?
"Given the very high level of reserve balances currently in the banking system, the Federal Reserve has ample time to consider the best long-run framework for policy implementation. The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system" -- Federal Reserve February 10, 2010
www.federalreserve.gov/newsevents/testimony/bernanke20100210a.htm#fn9
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"In the absence of a gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good and thereafter decline to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as claims on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to be able to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."
The above was said by Alan Greenspan, 'Gold and Economic Freedom' in 1966.
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Perhaps the real question is, why is the Fed not allowing these financial instruments to float in a free market all the way to maturity and to find a true, independent market buyer?
Perhaps the real question is, why is the Fed not allowing these financial instruments to float in a free market all the way to maturity and to find a true, independent market buyer?
Becuause there is no market, and there hasn't been one since 2008. The FED is the market and they know if they step aside and try to float these things to a market buyer, there won't be any buyers. Gross said it himself, if the FED pulls aside, so does he and his $1 Trillion. I'm pretty sure all the others are on the same wavelength as Gross.
Give me POMO, I will turn on skynet. Warm up. Ready. Go.
Updated S&P500 chart showing head and shoulders with target.
http://stockmarket618.wordpress.com
Thanks for such a great post and the review, I am totally impressed! Keep stuff like this coming!...
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