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Massive $6.3 Billion POMO Closes
Ben Batmanke saves the day again. Today's POMO is a whopper: at $6.3 billion it is the largest since the announcement of QE Lite (not the largest ever mind you - next month, for example we will see $15-20 billion daily POMOs). The submitted to accepted ratio was 3.5x as PDs gladly tried to convert $21.8 billion worth of 7-10 Year Bonds into shares of Apple, Amazon, Google and Netflix. Following last week's $4.7 billion POMO, today's action bring the Fed's balance sheet to $831 billion. Japan - watch out. And now the HFTs are stuck in churn mode as the liquidity infusion is done for the day. Next POMO - Wednesday.
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The American middle class will have been wiped out by the end of Obama's term. Revolution is nigh.
It will never happen. People like to talk a big game but the truth is they are to lost in their creature comforts and have grown too soft for a fight.
That is downright scary and it is downright true. Although I see some "awakening" going on, people don't have the will to do anything about it for the most part. Not only is lack of toughness an issue, for decades people in this country have had all sorts of "fear" pumped into their heads: fear of loss (of this, that, and other material shit), fear of failure, fear to step outside the lines, to tackle authority etc.
That's why I laugh when people shit on the French: love them or hate them and rightly or wrongly, they'll burn their economy to the ground and the government knows it.
I used to be one of those people who would laugh at the French. But at least they are taking a stand against this crap. I am just astounded at the complacency that I see going on around me.
I have seen photos taken at and heard first hand reports of absolutely huge numbers (100's of thousands) of people in DC at a Tea Party rally. If you look, you can find them.
For instance, Cincinnati had a big one
http://www.moonbattery.com/archives/2009/04/cincinnati_tea_1.html
http://thewhitedsepulchre.blogspot.com/2009/03/cincinatti-tea-party.html
Pretty damn big one in DC
http://www.politico.com/news/stories/0910/42043.html
Note how far back that crowd stretches.
Not hard to guess why the MSM mainly ignores/minimizes these.
The French are on the streets every fucking week - the only time I see folks on the street here in L.A. It's for the Gay Pride Parade.
which is exactly why there is such an attention being put on DADT before the election.
Like anyone really gives a shit about DADT.
People are getting more and more fed up with distraction tactics.
I can smell Rome well now, and it's definitely smouldering...
The fire is crowning.
Ergo, don't look up.
Correct - Dancing with the so-called stars is on = no revolution.
People need to be in a situation of "nothing to loose" Lots of people have stuff to loose and therefore we are not politically active or activists.
Right. Plenty clamor for change, but are hoping someone else will do the dirty work for them. I doubt you could even get sufficient numbers to make a civil disobedience statement.
Until enough fathers can't feed their children, then all bets are off.
They have to be able to spell "disobedience" first.
Are we sure we have enough adequately educated people to pull off anything other than the antics in Idiocracy?
Who was it that posted a picture of the protester with the mis-spelled sign that read "pubic" rather than "public"?
Oh, never mind. Of course it had to be WB7.
My personal favorite:
http://voxygen.net/images/2009/09/morans.gif
That all sounds good, but when a certain people who are used to creature comforts lose those comforts....watch out! If (and when) the dollar is worth as much as the sand on the beach, then those same people will turn on whomever took away their comforts and go Lindsey Lohan crazy.
Incorrect, and never say things like never and always; as it makes you appear stupid.
The powers that be have done everything possible in the US to keep the entitlement spending flowing... That stops and desperate people will do desperate things. At this point the revolution is purely ideological, but it could tip at any time.
When people lose everything, they lose it.
Its sad that they will have to lose American Idol and McDonalds in this country to do anything about it...
Just as it would be more palatable for UN forces to control the US in a time of civil unrest (US troops might be unreliable), it makes more sense to employ a Kenyan born, Indonesian raised globalist with a talent for lying to everyone and making them believe it as president during a time of massive social and economic change.
There is less risk that Kenyan born president will feel an emotional attachment to the American people and possibly sabotage the efforts of the globalists as they dismantle the US piece by piece.
He will have no trouble suing the state of Arizona in the UN over globalist supported free immigration and no trouble calling out the UN troops during a time of civil unrest... hopefully we will not see this happen... but supposedly it has been prepared as a contingency.
You're about half stupid... and I'm sure what the other half is.
I agree
Tyler - is there a "POMO for dummies" article/link to help explain to laymen like me how this works - what's the theory and mechanism for how this QE translates into equities?
Seems like the ZH glossary might be a good place - but that doesn't actually give definitions or links to guides - just links to all articles referencing the term.
http://www.zerohedge.com/article/pomo-and-market-intervention-primer
Thanks! I missed that when it first came out.
Banks have 2 years of ZIRP which they were using to buy treasuries and help fund the governmental ponzi.
Ben offers to print money in exchange for these treasuries that were bought with 0% rates.
Ben deposits cash in banks accounts and takes the Treasuries and presto chango. Money created.
Banks take this money and collectively buy all the high short interest stocks with 20-1 leverage to juice stocks even further like Netflix, Amazon and anything that will create volatility and even one another and gold goes higher. Turn the algos on autopilot and hope a real seller does not appear while the banks play pong with the same shares moving up stocks to false prices on low volume. If real seller shows up 4 days of pong is reduced to ashes as the machine front run one another to sell.
Already broke American consumers trying to save get punched in the face a little more as they are punished for not put their cash in the stock market (Giving to the banks to scalp) and become even more impoverished.
Toss in a daily headline about QE2 coming and hope to keep the wolfpack shorts from taking down one of the herd.
Flawless plan..until it is not.
Hmm - there's something I don't get then.
According to the FDIC in March 2009 institutional holdings of UST was only $38.1B. It has since (as of 6/2010) gone up to $165.0B, not down.
If the banks were selling previsouly-bought treasuries to the Fed (and using the money to buy equities), shouldn't this number be going down instead of up?
Or is the FDIC data bogus? Or am I just misreading it?
In other words, this is misallocation of capital at its finest.
What's really painful about these Fed actions is that it creates no value whatsoever.
All it really does is impede the natural capital formation process to such a degree that savers have little incentive to invest-- and that borrowers have little incentive to pay anyone back in full.
Someone mentioned the wathcing the Fed is akin to watching Jackass 3D... and more and more I think that sentiment is an accurate one.
And sad.
Free money to buy already overprices assets and undertaking never before seen leverage by already insolvent banks becoming even more insolvent daily...What could possibly go wrong?
Didn't move the market much... In fact, things are starting to look weak. Another Doji day? How many will we have? This is becoming hilarious!
amzn is dying now....the pumps do nothing. i guess it is filtering into the mainstream that we are about to endure the worst christmas buying season ever.........and amzn is priced for a blowout.....
my personal favorite stock right now is TGB...they are waiting on some seriously insanely good news....and its a gold stock...so it got Flash-crashed last week (wot a surpriz!!!!) by the boyz.....
now they are desperate to keep it below 6.70.....guess this was one of the poster boys for naked shorting.......
The "Big Three" are no longer autos, rather GOOG, AAPL, AMZN. They are too big to fail.
Yep. Lower interest rates at this point where they are already historically low aren't really going to spur sufficient additional spending and investment to meaningfully push the economy into healthy function. But the charade plays on.
But if ONLY I can get money at 2% instead of 4% on my "adjustable rate mortgage", I'll go out and buy 100 houses!! Yes, that's what I'll do, so will my friends!
Fed geniuses.
Did SPY go from 18.09 to 117.31 in 1 second and than recover or is my platform acting up?
Something just happened.
Maybe it was just a figment of my imagination. I'm sure the SEC would like us all to believe every Flash Crash and Flash Dash is just a speck of dust in our eyes.
Nuttin to see here folks, move along.
hmmm. I thought SPY was a more liquid instrument and not as vulnerable but I guess I was wrong. oops!
SPY has been sending out those very long 1-minute red bottle rockets for quite some time now.
SPY on steroids?
Sorta like your avatar?
Yeah, but you know what 'roids do to your weenie. Just sayin'.
RR
Caught your comment on the other thread about 8-track tapes and your daughter. Had a similar moment with my son around the same time concerning my old reel to reel "tape deck". Many decades ago I would transfer the music from my LP "records" (flash from the past) and then listen to the music using the reel to reel so as not to wear out the grooves in the record with the needle. Feels strange just typing those words. :>)
I pulled it out while cleaning up a back room when my son was 9, or around 17 years ago. He was perplexed and fascinated that something like this would exist when it was so much easier to use a cassette. He also wondered why we old farts would make movies and TV shows in black and white. "Didn't people like color back then Dad?" is burned into my memory forever. :>)
I had a TEAC reel to reel that I bought in Thailand when there with the Air Force.
Put all my albums on tape as well. At the air base they had rows of reel to reels and all sorts of albums available for the troops to play audio wizard. My specialty was aircraft electronics so I put together some amps and other gear in the base hobby shop.
I still have a couple dozen of the original albums I bought including Janis Joplin, etc.
This one is very similar to the model I had (A-4010):
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=180424870470&hlp=fals...
$550?
OMG
Time to dig my old unit out of storage again. It was also a TEAC, though I don't remember the model number off hand. Similar to "yours".
Mine was somewhat modified over the years with new input circuits, added Dolby, and replaced the level meters. Finally I think I just fried the whole shebang! I recall pegging the meters and smelling some odd burning odor....
Hey, look! Magical pixie dust is wafting down on Main Street. New small businesses with smiling, starry-eyed investor-owners, still wet with dew! And...they're hiring everyone in sight! With benefits and a free puppy for all. Awwww....
Aw, crap. Billions in bonuses. No jobs. Happy Monday.
backdoor ben
If we go red today, the next shoe drops tomorrow. Or I will eat my hat.
With all due respect, I don't see a hat on your avatar...may be the image cropping though
Deleted
I'm in if you throw in the thong.
Market will now solely move in anticipation of AAPL earnings AH. Lots of great stuff expected. A disappointment (not likely) would send the market into a tailspin tomorrow (a non POMO day).
But somehow Apple will beat even the most overly optimistic estimates with record sales of iPads, even though I have yet to really see anyone using one other than the couple on the plane across the aisle from me watching Glee.
Keep in mind what normally happens to AAPL after earnings are reported: big time 'sell on the news'. At least that's what normally happens under free market conditions. If that happened now there'd be an explosion at the NY Fed.
Not necessarily true. Last Q pretty much traded flat but after the Q reported in April, we saw Apple run 12% in the three days following earnings. The Q before that, same thing, a nearly 12% rise in three days.
A lot of people, Cramer included, assume AAPL sells off after earnings. But lately, that's not been the case at all since they've crushed "estimates".
We agree. Since markets have no longer functioned in the free-market way the opposite has been happening.
Agree across the board. I have yet to see anyone with an iPad. I keep hearing about these things but they are non-existent in my neck of the slums.
Monday music playlist, Steak and Shake:
http://www.youtube.com/view_play_list?p=438A49417E0A53F7
I need more sugar!! I want more sugar!!! Quick! Quick!
Everybody's on "Juice" like compulsive gamblers borrowing more and more from the mob boyz.
$15b - $20b ... per day?!?!?!
can you source that? $15b is three times the size of a typical large infusion. are they trying to pump the markets or have they come to the realization that a new bag-holder is needed and they're 'it'?
I think now theyre at the all-in 'go for broke' phase of destroying america...utter insanity at this point. Anyone trying to assign some 'economic policy' to this madness is just fooling themselves, they're fully guaranteeing america is totaly leveled to rubble.
Already happened - just look at Detroit.
Its really sad that not 1 single sane person exists in this country with any power or position to stop this madness. Everyone looks on day to day and says 'whatever', while the perfect storm sweeps on the land set to wipe out millions of people. Oh well, continue on marveling at the squiggly lines americans.
Symptomatic of the decline of empire. Fairly typical.
They didn't stop the tech boom, the housing boom, and they won't stop this one.
Follow the money.
$6.3 Billion gets ya 38 dow points.
It's like the day's 40th cigarette or 40th joint. The law of diminishing returns. Pretty soon it's gonna act like the days 40th martini.
http://www.youtube.com/watch?v=S1ku4QUhoXk
A billion dollars used to be a lot of money not long ago...
$6.3B levered 30-40X gets you 38 pts on the dow.
Perhaps because of Fraudclosure Gate the PDs are hording all the cash they can get as forced buy backs will become the norm.
TGIPD - Thank God It's Pomo Day
What this country needs is a good POMO etf.
I don't know why I keep looking at this market. If the winner is predetermined playing the game is just not fun anymore...
Completely and totally off topic...New York times reports that our illustrious President will make an appearance on "Myth Busters" on December 8th. What is the world is going on? When did our commander in chief become the National Sales Director?
That rumor is an urban legend. In fact the next episode of MB will test to see if the President will actually appear on Myth Busters. I beleive they will use Buster to simulate POTUS.
Not only that ... but on a myth they debunked in 2006 ...
http://mythbustersresults.com/episode46
2010 Script
Jamie: We're going to try and prove that Archimede's created a death ray with the sun.
Obama: I don't think it will work.
<Experiment fails.>
Jamie: Further proof of Obama's genius ...
<Cue harps and other bullshit ... >
Now I understand his interest, considering the Roman Pillars at the Chicago event. Thanks Irish.
He's there to bust the myth that the government works for the people.
Further Hideous News of the Day:
Meet the new tax man: Big Banks and Hedge Funds.
http://www.huffingtonpost.com/2010/10/18/the-new-tax-man-big-banks_n_766169.html?ref=twitter
Here's the fun part:
Sack was nice enough to telegraph mid-auction just how much would be sold.
Ball Sack is always willing to accommodate.
That guy is nuts.
Let's see. If for every buyer there is suppossedly a seller,my competition for making a profit on a stock is a high speed computer or the Fed. I don't like the odds. Stocks will probably ramp but if I have no way to properly evaluate a stock holding will the underlying economic forecast, I can't play. Just like, How do you value a financial stock right now. May miss a boat but I will live to play another day.
Tyler,
At some point you must educate the masses bying going on FOXNEWS or Glen Beck about this ponzi scheme. Has anyone thought about if stagflation results the Fed will take a HUGE bath on these treasuries/ notes that they bought at record high prices and we the tax payer will be stuck with the bill? And guess what it would amount to another transfer payment (ie socialism) to those not paying taxes to those who do. Who gives this A O Ben the right to even conduct open market purchases of this size? This is reckless.
If you had a POMO tee shirt. Would people think it's some new gay shit?
The old Huxley versus Orwell argument.
http://forwearemany.files.wordpress.com/2010/01/huxley-vs-orwell.jpg
Thanks for that link.
Nice. Gee, that's not much different from "Republican versus Democrat".
Where in the constitution does it give the Fed the mandate to decide whats the exceptable level of employment? They have become an arm of policy making and I have had enough.
In the constitution no.
If appears that it is the belief of our "so called" leaders that the US constitution is out of date and irrelevant (although they will not tell the public this). They prefer a globalist government and globalist laws.
In fact, several sources report that the US constitution was suspended in 1932 and now treaties and executive orders are the main ways that US policy is formed. Congress creates irrelevant legislation that does not bother to question its constitutionality .. and the Supreme Court seemingly now takes international law as a higher authority than the constitution regardless of their oath.
FWIW - it's specifically called out in the (amended) Federal Reserve Act.
Not that that makes it right. But it is constitutionally legal.
i've been following ZH reports about pomo and it seems to me the effect takes place in the afternoon of the settlement date
like today we'll see fridays pomo, but tomorrow would be today's pomo
anyone else see it that way?
Good question, interested in the answer.
Is the Fed doing two or three POMO's a week now? Is there an ending date???
here's the zerohedge link for the article showing future pomo schedule
http://www.zerohedge.com/article/fes-posts-schedule-upcoming-pomos-it-wi...
There is a conceptual thing that I do not understand and the primary issue is "where do the primary dealers get the money to buy treasuries and how this money transfers to the Fed when it buys the primary dealer USTs?"
Are the primary dealers creating money out of thin air, the way a bank in a fractional reserve system would create new money backed by a mortgage? If so then just like the money created out of thin air by the mortgage bank as the principle is paid off, the money that was created out of thin air is destroyed and the bank keeps the interest as profit.
OK, so now a primary dealer makes a loan to the US Government in the form of a UST purchase. The money is creasted out of thin air. Ostensibly when the UST matures the principle amount will go poof and the bank keep the extra paid as their profit. However when the bank sells the UST to the Fed, are they selling it to the Fed for the value of what will be earned on it or are they selling it to the Fed for the full face value (including money created out of thin air)?
If they are selling it to the Fed for full face value, then one of the most remarkable money laundering (money creation) schemes has just taken place. The Fed and banks have turned thin air "poofable" money into balance sheet cash... which is then 100% pure profit... and then the Fed will "poof" the money when the UST matures because the Fed can create and poof money at will with no one noticing.. because that is what it does.
However the effect is that the Fed is giving free unencumbered money to the primary dealer, for money that needed to be destroyed at maturity of the UST. If so then that is fraud and consequent embezzlement of the highest degree. The sentences for that should be most severe!
The money isnt destroyed. There was always a question of where the money that was rolling off from the amortizing MBS protoflio was going? It was only when the issue of reinvesting proceeds arose (cough cough more QE). The money was either being burned (not) or it was being redeployed (UK treasury holdings, AAPLy etc.). As for the treasuries, remeber that the intial purchase of the soon to be bought Treas was "real" money. The Fed buy simply washes more money into "circulation" in the virtious cycle of monotizing the debt and funding welfare, workfare, military, seniors, ect.
My understanding is that all money is equally real and unreal. The only question is which path the money followed:
1.
- Fed creates the money out of thin air and then loans it to the banks
- Primary dealer banks buy USTs using money borrowed from Fed
- Fed creates more money out of thin air
- Fed buys USTs from primary dealers
or 2.
- Primary dealers create money out of thin air (using fractional reserve banking)
- Primary dealers buy treasuries using money created out of thin air
- Fed creates money out of thin air
- Fed buys treasuries from primary dealers using money created out of thin air
The Idea is for the Fed to put more money into the system and doing it through route #2 gives the banks clean laundered money that "maybe" they don't have to poof, which is then used to buy stocks... (but they probably should destroy the money because they no longer own the asset)
Google today was the main, 85% i'd say, recipient of the POMO bullshit. Straight up now tell me....panic buying....sheer panic
Question - isn't that $6 bil the par amount, and thus the actual dollar amount is higher, given all of those were seling at a premium because of their higher (than current) coupon rate?
When the fed goes nuclear, and does $100B a month, $25B a week and $5B a day, dow 36,000 should just about be achieved by Palin's inauguration.
Doesn't the future look bright?
Shoot me now. Please! Or redirect the gun. Just do something.
I'm too busy undergoing brainwashing to remove the Palin image. :>)
P.S. Tyler, please add "Palin" the to ZH word editor spell check. Unfortunately she's not going away.
But she does have that shicks-appeal thing going on. Don't know what it is about her because I don't find her particularly attractive just something about her says "hump me like a mad Bullmoose!"
I need help......
Ben Batmanke saves the day again.
Priceless...
ORI
http://aadivaahan.wordpress.com
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Thanks for taking the time to discuss this, I feel strongly about it and love learning more on this topic.
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