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New York Fed Completes $540 Million Reverse Repo Even As It Proceeds With QE Lite

Tyler Durden's picture




 

The Fed continues to send schizophrenic signals, as one day after announcing it will be purchasing hundreds of billions of bonds it completes yet another half a billion liquidity extracting tri-party repo. This time the Fed used all three core types of collateral: USTs, MBS and Agencies, transacting in $180 million of each, paying an average stop out rate of just over 0.2%. We just wonder who the Fed is trying to fool with these "tests" - it is more than obvious that the Fed will never tighten again, or at least not until the next regime takes hold... some time after the debt repudiation event.

 

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Wed, 08/11/2010 - 10:04 | 515043 TooBearish
TooBearish's picture

Fed funds shld plunge here will aid in the PM magical recovery of the Spoos

Wed, 08/11/2010 - 10:06 | 515047 Caviar Emptor
Caviar Emptor's picture

Yup. Double Whammy's a beetch. What's a Fed boy to do?? :-)

Wed, 08/11/2010 - 20:38 | 516900 StychoKiller
StychoKiller's picture

Some days, it just doesn't pay to gnaw through the leather straps!

Wed, 08/11/2010 - 10:08 | 515056 lizzy36
lizzy36's picture

QE II proving that sequels always suck.

However, still waiting for breaking news: market 20 points off the lows. 

Wed, 08/11/2010 - 10:13 | 515069 Cognitive Dissonance
Cognitive Dissonance's picture

@ 10:05 AM EDT

CNBC just flashed that all 30 DOW stocks are down and 99% of all NYSE stocks are down. Can you say panic selling? I wonder how hard the PPT is pushing in the other direction?

"I'll take everything you've got to sell. Just put me down to buy everything."

"All the stocks?"

"Everyone!"

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

Wed, 08/11/2010 - 11:00 | 515191 traderjoe
traderjoe's picture

Maybe the next move of the PTB is to let the market drift lower (the news has been bad enough that to do otherwise would increase their visibility) and allow the Republicans to win some midterms. This allows the sheeple an opportunity to believe that they are 'participating' and 'choosing' and keeps the game churning for another 6 months. 

As you have noted a couple of times in the recent days, things seem to be coming to a head. They don't appear to have the answers on how to get everyone out of this mess (not that they would ever want to, but they do profit from keeping the system running). So, it seems like they might focus on stop-gap activities like mid-term elections, NFL season, etc. Buying themselves 6, 12, 18 months before the ultimate conclusion. 

Wed, 08/11/2010 - 10:13 | 515070 LePetomane
LePetomane's picture

Le jeu, c'est fait

Wed, 08/11/2010 - 10:22 | 515094 Infinite QE
Infinite QE's picture

Generating commissions perhaps? 

Wed, 08/11/2010 - 10:27 | 515109 Sudden Debt
Sudden Debt's picture

just lost a months gain today...

Wed, 08/11/2010 - 11:14 | 515227 firstdivision
firstdivision's picture

WTH were you doing sitting long by the beginning of this week?

Wed, 08/11/2010 - 10:28 | 515110 RSDallas
RSDallas's picture

I agree, it will be a long time before the Fed considers tightening.  Doesn't this reduce the reserves though?  If so it would appear that Ben is just making room for his "run-off" purchases.  This should result in a net neutral reserve level.  Not much here.

Wed, 08/11/2010 - 10:30 | 515113 Caviar Emptor
Caviar Emptor's picture

You won't see big losses in stocks. Even as the economy tanks. Part of the Double Whammy picture I've been talking about. 

Wed, 08/11/2010 - 10:31 | 515118 old_turk
old_turk's picture

If you think about the ECB swap mentioned earlier, and then you see this. 

It makes sense in that we have tightened here, loosened over there.

It's a tweak, yes, but it is how the game is played.

Naturally, the game doesn't end well for anyone but to a player, it's the game that matters.

Wed, 08/11/2010 - 10:45 | 515156 ShankyS
ShankyS's picture

That's kinda like a reverse mortgage right?

Wed, 08/11/2010 - 10:55 | 515174 gmak
gmak's picture

A repo is when the FED lends money to the bank and holds the MBS (or whatever) as security. The bank still gets all payments associated with the security and retains ownership.

 

A reverse repo is when the FED pushes a security onto a bank and is given cash (as a loan).  It's nothing like a reverse mortgage except the roles reverse.

Note that repos and reverse-repos are not open-ended. There is a maturity date.

Wed, 08/11/2010 - 11:10 | 515216 cocoablini
cocoablini's picture

I thought the FED takes cash from money markets and other savings accounts in exchange for treasuries and toxic bilge and gives our savings to the banks to cover their liquidity problems.
This is basically money supply confiscation- handing it to their buddies. A lot like the gold confiscation act where the system has to take savings and inject it into the money supply to prevent liquidity stress and total asset meltdown.
It won't work...

Wed, 08/11/2010 - 15:28 | 516130 Grand Supercycle
Grand Supercycle's picture

DOW/SP500 daily charts are now bearish.

So the downtrend I first mentioned in early May this year, can now resume.

http://stockmarket618.wordpress.com

Thu, 08/12/2010 - 00:02 | 517155 BlackBeard
BlackBeard's picture

ahhh... the lost art of nothing while appearing to do something...

Thu, 11/04/2010 - 20:55 | 701569 rocky89
rocky89's picture

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