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Results of Fed POMO: Whopping $3.4 Billion Monetized, 5.06 Submitted/Accepted Ratio
The Fed's POMO is now over and the equity ramp may stall, even though the Fed provided a whopping $3.4 billion in extra liquidity to buy various 6-10 year USTs. The issue most in demand by the Fed was the 3.75% of 11/15/2018 which saw $1.075 billion in buybacks by Brian Sack. Altogether, the Fed saw $17.2 billion in bid submitted for today's POMO, leading to the lowest submitted/accepted ratio since QE Lite began a month ago. And with this action the monetizations for the first part of the QE schedule are over. Today the Fed will release the second tentative POMO schedule, which we anticipate will remain roughly the same with two reverse auctions occuring each week until the mid-term elections, for an average liquification of about $5 billion per week.
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"We will not monetize the debt" - Bitchez!
http://www.washingtontimes.com/news/2010/feb/25/bernanke-delivers-warnin...
Save this one for posterity. When the interest on the debt can no longer be serviced with tax receipts, they crank up the presses to cover the difference.
Path of least resistance always.
He also said in 2007 that the Subprime problem was well contained.
He apparently thinks he is still teaching an MBA class at Princeton where he can say anything he wants to the students and change it later.
Meanwhile I have lost 10%+ on my FAZ from gap downs and even more on non existant volume. Of all the rallies I have seen in the past year this is the weakest in my opinion but sure enough it can run higher.
That's an outright win compared to -30+% on TZA I've taken up the rear as SP500 rallied 70 points in first few days of September...
Sorry to hear that. I stopped trading in Nov 09 and went long FAZ with full intentions if holding for a year + for that lucrative long term cap gains tax rate. I have made it this far and refuse to capitulate as I believe they have sucked as much blood from the shorts as they ever will for quite a long while. I suppose I am betting against their ability to recreate a bubble one last time. With all the future demand sucked forward for the sole purpose if the rallies that have been occuring I cannot see them succeeding.
"... went long FAZ with full intentions if holding for a year + for that lucrative long term cap gains tax rate" ...?
John! Surely you're aware that leveraged ETFs suffer arithmetic decay that makes it IMPOSSIBLE for them to be profitable over long time frames ...?!?
Don't get me wrong; I'm not bashing leveraged ETFs, and I trade them myself. But read the prospectus! These funds make no secret of the fact that they're designed for DAILY leverage, not monthly or yearly! Holding them for a month or more is pretty much a guaranteed money-loser.
ML, he's serious, and don't call him Shirley.
You're holding FAZ long term? Maybe not the best idea since leveraged ETFs reset on a daily basis. Even if the market craters over an extended period of time, your FAZ may still go down in price.
Check out what FINRA says about leveraged ETFs here: http://www.finra.org/Investors/ProtectYourself/InvestorAlerts/MutualFund...
Don't even bother holding x3s for long term. When the ducks are in a row you ease into position. Might as well use calls instead due to the timeframe, and keep some powder dry. Buy a couple months out, hedge with the opposite inverse of shorter term over big press releases to hedge.
Decay works against you but when tides turn the compounding works for you.
Sh is a decent 1x that can be held for longer terms.
better still puts on the inverse 3x.
So if the thing collapses for some silly mechanical reason you still win.
Same here. Buy can you logically play the other side? No way.
Some days we just got to take the beating.
As a matter of principle I cannot. I suppose I am hoping enough ppl have the sane mentality or at least gradually accept the same mentality. The same carelessness that arrived them at Sept 08 will be their undoing once again but magnified. I cannot see any rational person going long this market especially banks and I do not believe many have aside from the IB and The Fed because they are not rational.
Most of the earnings were false in th past 6 years and now we see only accounting tricks and trading are their source of income since the housing market has nothing but losses in store for them. The days of packaging garbage and rating it AAA and unloading it to the fools is gone for good. I just keep waiting for them to turn on one another to survive. Like highlander there can be only one as there is less cash to scalp. In the end they will make Ben look like a fool for entrusting them to do anything aside from leech the economy and do what is in their own best interest. Even they are not so stupid as to not be short the greatest bear market rally in history. Their reward for shorting the markets lower is more QE from Ben.
Dude, just buy fas calls at interms even out of the money to give some protection on headline releases to give some protection. If the calls pop up, dump em and average down. Rinse and repeat.
No that I would wish bad for any ZH'er, but I am sort of happy to see that I am not the only soul that keeps looking at my 9mm wondering what I will do with my loss on my many shorts. Just waiting and trying to pick something on the long side on a small way.... I just can't believe this mess.
Job 31:24, 28. If I have made gold my hope, or have said to the fine gold, Thou art my confidence; This also were an iniquity to be punished by the judge: for I should have denied the God that is above.
It should be interesting when POMO slows down after the mid-term elections, and traders and investors start to contemplate the implications of the the coming capital gains changes to start in 2011, along with lower earnings and a slowing economy.
If you think that's interesting, just wait until the methane clathrates release from thawing permafrost. That means Alligators in the Arctic!
I will wait for both events. I have till death.
Just take the blue pill and stop to worry.
Ah, there's nothing like the smell of liquified monetizations and debts on a Monday morning.
$5B a week. That's good pay if you can get it.
i wonder if all of this bankster / pd welfare redistribution has anything to do with the dollar's free fall today...hmmm....
Hardly seems worth it all, to be paid back with something of less value ;-)
http://www.supermotors.net/getfile/721183/fullsize/pinto-wagon-ds.jpg
Back in 2000 when the bubble was bursting the Gov't unexpectedly was replacing the weakest stocks in the S&P with some of the strongest from the Nasdaq, plus a few other shenanigans. It slowed the fall, but ultimately the market is going to go where it should go.
Knight humps Queen, Pawns hump Queen, Gang Bang the Fed!
It's good to be the King...
$5 Billion per week.....so we should forget any down side move till the elections are over
I was considering some down side plays today, but, is the fed's action enough to hold up the market through the fall? What to do? What to do?
I think I turning Japanese. I really think so! I really think so!
Chart: ES
Roof Top with Chimney: the market giving Big Ben the finger.
http://www.screencast.com/t/NmJlM2ExZWI
Follow-up:
http://www.screencast.com/t/NjVlZmM4NjY
Okay, Tyler, now I understand what you mean by Brian Sack manipulating the stock market. You think some of the money from these purchases of Treasuries ends up buying stocks. That's true, fair point.
But Brian only organizes the buying process. I'm sure he doesn't even decide the balance of long-term vs short. Not a very impressive anti-hero. An economist by training, how market-savvy can he be. If you're just bored of always ragging on Ben, how about William Dudley, the Golden Sachs alum?
ALAN GREENSPAN'S ASSET BUBBLE BAND
http://williambanzai7.blogspot.com/2010/09/alan-greenspans-asset-bubble-...
Can you come up with another term for POMO. This fed garbage is an insult to all the Nor Cal Indians (native americans (injuns))