Wonder Why Market Just Surged? One Word - POMO
A boatload of bad economic news - check, full blown admission by all central bankers that the only way to preserve a broken system is by global market intervention - check, and stocks are... up? Instead of bashing your head in with a sledgehammer trying to explain this, here is your answer: POMO. The Fed just opened up to submitting bids for about $2.5-$3.5 billion in bonds dated 2014-2016, meaning there will be about $70-$100 billion in leveraged capital released by the Fed to the Primary Dealers to bid up all companies with a beta of 4.0+, as the Fed's number one task for the month of September is to get hedge funds, all of whom are now all in on the beta wave, if not above their high water mark, then at least to October 1 and prevent a tsunami of redemption requests.
Link to today's POMO.
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