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Today's POMO: $1.8 Billion
After yesterday's $2 billion POMO, excess liquidity is sorely needed. After all the S&P 500 has gone a whole 24 hours without the Fed injecting some heroin-laced Redbull into the market. So the ever generous Chairman Ben takes out his checkbook and writes another $1.8 billion taxpayer funded check. Of the total amount repurchased, 60% is coming off 2009 auctions. With this action, there is now $14.9 billion left in Treasury repurchase dry powder.
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Benny better slow down, or October will really hurt. This must be the last push to lure buyers into the market. Desperation is in the air.
Each dollar lately is buying less and less ramp up. Look out below when they finally stop, which they eventually will when they need "real" purchases of government debt by scaring "real" people into the Treasury market with the next stock market crash.
You know it's coming.
"I remember once buying the stock of a small company and I couldn't believe my luck. Every time my fund bought more shares the stock would go up. So we bought even more and the stock kept climbing. When we finally built our full position and stopped buying the stock started dropping, ending up at a price below where we started buying it. We were the market."
- Andy Kessler
Dear Count Fedula,
Whilst I do understand the desire to deal with deflation by printing money and using it to liberate haemorrhagic 'assets' from the books of bobo-the-clown, it does seem that your mandate to maintain full employment is not working out so well, mostly because all that money is making it into the real economy with exactly the same success as the local parish priest convincing me that he's not a paedophile.
But don't worry, I have a suggestion. You see, I will happily take very, very, very large short positions in this thing you call 'the stockmarket'. All you must do is ease up for a few months on the whole liquidity thing and ask your buddies to switch Hal-9000 off. All that thin-air cash will then flow out of the market and into my bank account and I promise to spend it buying real stuff in the real economy. I swear.
Cross my heart and hope to die.
Kind regards,
Mediocritas
My company just had a client conference call wherein they, in no uncertain terms, declared the recession to be clearly over. Umabiguous signs of growth going forward. Overseas even stronger than here. Happy days are here again.
I'm terrified.
The recession does not need to be over. The public just needs to "Think" the recession is over. And the public will think the recession is over when the indicators that the public relies on for information shows that the recession is over.
The public watches the DOW Jones Industrial average.
The public watches the S&P 500.
The public watches the NASDAQ.
The public watches the price of oil.
The public does NOT watch the dollar, or the baltic dry, or the carry trade, or bond rates, or M1, or M2, or MZM, or anything else that needs more than 3 seconds to figure out.
Please understand, the traders in GS and JPM and the rest of Wall Street are not stupid. (Greedy, lying, thieves that would pimp their mothers for a buck, but not stupid.) And please understand that they read web pages, or have someone else read web pages, and give them the results. Well, when main stream media web comments are talking about lining up big bank traders and Wall Street insiders and hanging them along each side of Wall Street, there is a problem. (Look for comments from April through Juneish on Yahoo, MSN, CNBC,NY Times, etc.) Also understand that it is VERY hard to spend your stolen trillions when you are hanging by the neck from a lamp post 10 feet from the ground and the crows have pecked out your eyes.
We were || that close to a revolution, and for the first time in a generation the first people up against the wall would not have been the lawyers or politians, but instead would have been the bankers.
So yes, the bankers will push up the DJ, and S&P, and NASDAQ, and Oil. They wont care how they do it, because the public does not care how they do it. The public just needs the perception that things are better.
They will do this by placing out of favor mainstream stocks (BAC, C, FNM, FRM, CAR, etc) on a rocket and shooting them up, and when those stocks are at a comfortable level, they will SLOWLY sell off their position as the public, pension funds, mutual funds, and 401ks buy into the higher level.
The reason they will keep it slow is that if they sell off too fast, the market will crash, and bankers will then die. But if they pull out slowly, they both get to keep more gains on their scheme, and individual stocks that fall ~1% a day do not make the news.
At this point, it is about survival for the bankers. They have the profit, now they just need to be able to keep it and spend it. Please keep this in mind when thinking about trading or shorting the market.
$16 billion offered... 9/1 ratio... get in the queue