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Upcoming POMO Actions: Today (In Process) And Monday
For all those who are wondering why the market may have caught a vapor bid today, here is your answer: the Fed is currently (as of 10:15 Eastern) conducting an auction for Bonds maturing between 2013-2014, which if Morgan Stanley is correct will inject roughly $2.5 billion in new market liquidity. Lever it up 15x and you get some decent market moving potential. And as the FRBNY discloses, the next auction will be on September 13, when the Fed will focus on the 7-10 Year "belly" of the curve. Today's POMO result will be announced at 11:00am: expect no stock weakness immediately following the reallocation of capital from USTs to stocks via the PDs.
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not sure why anyone thinks MS is "guessing" at maturies; they are offered at frbny on a calendar so no "guessing" is needed.
not guessing on maturities: determining precisely which CUSIP will be bought back. there are many cusips in any given date range
Admittedly off topic: Don't expect a gold rally today or tomorrow. Don't expect too much of a decline, either, as the market continues to find buyers on any dips.
The Evil Empire is in serious trouble. They have been reduced to "buying time" but now only measured in days, sometimes even hours. To that end, there is no way they can allow gold to settle above 1267 tomorrow. For all you chart-readers out there, 1267 on the October contract is the all-time intraday high from back in June. A weekly close above that number would be remarkably bullish and must be avoided (by the EE) at all costs.
I can't imagine that the EE won't be successful in containing it, at least for this week.
dont miss the dips in silver plays
Fed/Treasury export strategy revealed:
"Gold exports, nonmonetary -
This addition is made for goldthat is purchased by foreign official agencies from private
dealers in the United States and held at the Federal Reserve
Bank of New York. The Census data only include gold that
leaves the U.S. customs territory."
http://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf
pg 30
I fail to see how these benefit Main Street.
They will need to pay more taxes = less spending on chinese crap = a smaller trade deficit = Good!
You mean you don't wanna buy my bridge? Come on man, its a great bridge. I'll even throw in a CRE portfolio and a bunch of IOUs from the governator.
Waddya say now?
I realize the point is the marginal liquidity being provided - but with such a small % of bids being accepted and bonds declining today - is it worth it front-running these POMO's?
Frontrun equities on the Pomo days. It works for me.
Yep, many stocks got a hard-on at 11:00 for no good reason.
RIG,COCO and WYNN to name a few.
"reallocation of capital from USTs to stocks via the PDs."
Let's get the story straight. Are the banks buying US treasurys, or stocks or both?
come on, you really think they bother with pomo via pd's into stock futures gymnastics?
no way. no way. They very obviously have the means to move the stock market at every given moment, and they abuse that means at every given moment.
a shocking assertion? please, we're talking about bankers and central bankers here - THE SCUM OF THE EARTH
would they cheat lie and steal and rape you silly?
yes. at every opportunity. they've made this very obvious.
Tyler:
I'm trying to understand the fed here. Isn't the market supposed to go up while they're engaging in the purchase of these securities? Sometimes it does, sometimes it doesn't. Why? Do they always initiate the process at 10:00 AM?
I guess I'm really trying to factor these activities into my trading. Any guidance you can offer?
Buying the SP500 futures is the most government manipulation for the money...
Best bang for the buck....
That is until all goes "bang"....
Question : what it does it mean when Gold tanks almost 1 % ? Is Paulson liquidating more holdings ? :=)))
Remember before everything went to hell-in-a-hand-basket in 2008 we saw….
Within weeks the market was tanking -777 points and wiping out $1.2 TRILLION in wealth in SINGLE DAY too
Where did that 1.2 trillion go? Did it just vanish into thin air? Just asking.
It was an accounting fiction -- it never really existed.
If MyComp, Inc. has 1 million shares, trading for $1 each, and then somebody bids $2 for *one* share, then we can "pretend" each of those million shares are now worth $2. Neato -- the company *used* to have a market capitalization of $1M, and due to a single two-dollar transaction, we now have a market capitalization of $2M. It's even more fun if somebody bids $30 for *one* share.
So, the $1.2T didn't really exist -- it was an accounting fiction based on flawed assumptions related to accounting, assumptions of an efficient market, and assumptions based on counter-party risk, equity, contract law, and projections of future (continued and increasing) leverage.
With large capital losses like this, you are merely seeing re-pricing based on de-leveraging. The $1.2T didn't disappear -- we are merely re-pricing what was fundamentally priced incorrectly before.
That's also why there's no turning back on this deflationary unwind. (A whole lotta baby boomers are screwed with no chance at satisfaction.)
Talk about monetization. The 7s were a recent creation, less than 2 years ago. They were designed to be marketed to the Chinese.
Guess this pomo is for the Rothschilds to to suck the sewage up from China:
http://redgreen.wikia.com/wiki/Rothschild%27s_Sewage_and_Septic_Sucking_...
Life is better than fiction. Or TV.
I have a question:
If the Fed is injecting liquidity to move stocks higher, wouldn't it also make sense that once that frenzy ends each day, there should be at least a partial sell-off as well? In other words, couldn't we play both sides of this, both the push higher and the selling the ensues when the bids dry up?
The speculation is that the Fed is purchasing (S&P500 and/or whole market) futures contracts. This would result in a sustained "floor", as it establishes a future date of minimum value for the index, so you can't count on a sell-off. Further, the Fed could (and probably does) actually take delivery (similarly there would be no indication of a sell-off since those shares are logically "retired" in the Fed's hands), and the Fed probably intentionally makes calls/puts to intentionally "lose money" so the other side of the contract can get free cash (it's the easiest way for the Fed to inject liquidity to a targeted counter-party without pretending to favor a given entity -- plenty of precedent on this, like Whitewater).
As numerous recent articles have pointed out, there is no diversification anywhere (stocks, bonds, and sectors are moving in lock-step). That behavior would be consistent with this speculation of the Fed buying whole-market indexes. So, no, there is no guarantee of "pullback" that you could leverage. (We're merely attempting to guess how to front-run the mood at the Fed purchasing desk.)
However, even though futures contracts are most likely, I wouldn't be surprised if they are doing specific stock targeted buys (e.g., buying "Citibank", "GM", F&F, or any other company they want to specifically subsidize). Until the Fed decides to "sell/divest" those shares (probably never), you won't get that pullback until the rest of the market overwhelms the Fed with sell orders (which IMHO would not be very controlled, so I question the merits of any possible front-running here either).
Your best bet is to get your name on the "Friends of the Fed" email list.
Nice article thanks.<br>
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Nice article thanks.
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