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Morgan Stanley: 16 Out Of 16 In Fed "Frontrunning" Projection As Fed Announced Schedule Of USTs To Be Purchased
Update: and, lo and behold, the market was more than prepared to front-run the Fed: the issues prescribed by MS for prepurchasing (and then selling into the Fed's bid), account for 92% of the $2.551 billion in total Bids Accepted (out of a total $20.949 billion in Bid Submitted). The result: a stunningly low 12.2% hit ratio as everyone was more than happy to sell to the Fed. And guess where the cash the PDs just got from the Fed for selling into its bid is going...
This weekend we presented an analysis by Morgan Stanley which attempted to anticipate precisely which bonds will be bought, and which will be excluded (in How To Front Run The Fed With The Best Of 'Em) in today's FRBNY Open Market Operation. To Igor Cashin's credit, his projection was spot on: his suggested 10 issues expected to be monetized all made this list. And, more importantly, the six exclusions were all correct as well, yielding his prediction a 16 out of 16, or A++ score. The full list of securities to be purchased at 11am this morning is presented below. To those who bought in advance of this action as we recommended, congratulations. To those who missed, it, the schedule of upcoming CUSIPs most likely to be purchased in the next 4 auctions through September 1, is recreated below. Once the actual results of the auction with notional amounts is disclosed post auction, we will update this post. Regardless, the massive rip in Treasurys over the past week begs the question: was the action merely one massive frontrunning attempt, and is today's weakness in the Treasury complex just the unwind of that trade...And as for equities, now that POMO is back, it is worthwhile to remember that on POMO days, the market is up about 99.9999*% of the time.
The just released announcement of eligible and ineligible treasurys for monetization (together with the previously presented reason for exclusion):
And below is the list of most likely inclusion candidates in upcoming futures.
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this is the link if anyone cares. AND, just like before, as soon as the purchases are done, the market lurches up.
http://www.newyorkfed.org/markets/pomo/display/index.cfm
those of u who think the market is going down, i think the odds are against you.
...for a finite period of time.
I love how they won't buy the CTD. Wouldn't want to be accused of manipulating the market....
Unwind ... yeppers.
Could be some selective targets of opportunity for the nimble.
Further evidence that there is but one ultimate buyer in these thin, manipulated US equity markets... we may be once removed from the actual buy ticket, but its our money. And we taxpayers are the ONLY thing between a meltdown in this market and a FED induced meltup.
Of course, strangely enough, we don't share in the profits on this trade we bankrolled... but what else is new?
Gotdam refreshing to see some sell side research that works - thanks to you ZH!
I am suggesting at this point the next ETF catagory "FRTF" (Front Running The Fed) to include:
FRTF USGOVBOND
FRTF GSEGOVCDO
FRTF US$BUST
And of course the usual lever 2x, 3x, synthetic derivatives, etc.
This is reminding me of the 2003-2007 period where masssive amounts of debt (almost the size of this lady I saw at wal-mart yesterday) to buy companies and merge. The execs win everytime with props for buying more shit and fucking us in the drive thru!
so now that money is free we are going on another debt binge to end all binges...
this will buoy the market sans the small investor....c'est la vie
I'd been wondering where Paul the Octopus of World Cup 2010 8-for-8 predictive fame had got to ... official word was he'd retired, but it looks like MS made him an offer he couldn't refuse.
¡Viva el Pulpo Pablo!
nice job highlighting this
stinking rotten Fed just hands these assholes money
"here you go, shareholder bank, here's money for you"
and only a PD's can benefit from this. Retail investors need not apply.
Serfdom coming back in a big, big way.
selling in to the bid...
isn't that one of the signs
of the apocalypse
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