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Primary Dealers Prepare To Invest $27 Billion In Fed Money, Levered 30x Over The Next Month, To Buy High Beta Names

Tyler Durden's picture




 

The forced melt up higher once again resumes with no correlation to the recently prevalent Treasury butterfly, as whatever stat arb desks have not blown up in the September move are now once again correlating stocks exclusively with the AUDJPY in yet another chicken-or-egg catch 22. For those who prefer the comfort of a catch 33, we would be far more concerned why the butterfly has collapsed even as stocks are glued to VWAP as if with a tractor beam straight from Darth Vader's toilet. Of course, ES still have to close about a 25 point gap from earlier this month, when the ramp brigade just went truly apeshit. Daily divergences will close, but the real move will be when that particular gap with both the AUDJPY and the 2s10s30s is finally closed. Until then let's just all pretend we have a market. Here some may ask what's the point in fighting the Fed's almost daily stock ramping, and they may well be on to something: the New York Fed has just disclosed it will buy $27 billion in Treasurys between mid-Sept and mid-October. Using the Basel III blessed 30x leverage, this money, once it makes its way to the Primary Dealers, should be sufficient for a $750 billion leveraged push higher in risk assets. And just to prove that point, there will be a POMO on both Wednesday and Thursday. You didn't think a politically "impartial" Fed would allow a  market crash before the mid-terms now, did you?

 

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Mon, 09/20/2010 - 20:32 | 593584 Kayman
Kayman's picture

It's a hail mary pass; and you do believe in miracles, don't you ?

They are going all in; so they believe in miracles.

Tue, 09/14/2010 - 03:15 | 580118 yabs
yabs's picture

I get the feeling that its a conspiracy against me as well

I entered stocks on tow main occasions befoere i knew what i was doing. I entered in 2001 before the big crash and 2008 before ther big crash

Now I think i know my economics and read sites such as this I put fairly hefty shortzsin ETF's in August. I also sold a lot of my other shares convinced it was going to  crash sand now look..

 

I may actually buy some longs just to see it sink

It will be worth losing a bit of money to see this bitch go down

Tue, 09/21/2010 - 19:10 | 596071 Meatier Shower
Meatier Shower's picture

In Soviet Russia, the market trades you.

Mon, 09/27/2010 - 07:42 | 606837 Herry12
Herry12's picture

Thank u, i found this for a long time.
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