EB's blog

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It's the end of QE (as we know it)





With the Fed’s $300 billion gift card to PD’s Treasure Island maxed out, one wonders who will support the vendors chomping at the bit to offload Uncle Timmy’s 3 to 7 year wares. But with the sun setting, the Japanese tourists trickling out, and the kids tired from a hard day of play on the S&P 500 Coaster and the SPY IOI Whack-a-Mole, it would be easy to settle into a semi-euphoric complacency, thinking ahead to a frolic-filled night on Pleasure Island...

 
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Fed Splurges on Freddie Gold





Here we deconstruct the largest of the AAA rated Agency MBS offerings that the Fed just bought (at the bargain price of just under $9B). No mortgage insurance and no verifiable assets or income are all highlighted features for a non-trivial portion of these CA-dominated loans, 18% of which are cash out refis. Who says the taxpayer isn't getting his money's worth?

 
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Patrick Parkinson: A Case Study in How to Get Promoted at the Fed





Track the career of the man who in 1999 testified to Congress against derivatives regulation on behalf of the Fed and PPT, only to recant in 2008, then become Fed's Director of Banking Supervision.

 
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VWAP Reversion Algorithms: 1932-Present





The JPM gnomes co-located in the basement of the NYSE building at 10 Broad Street must have had their adding machines on overdrive in 1932 because, after that July low, the Dow would never trade below -24% of VWAP measured from that low. In fact, you could have made some major market calls by...

 
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Project VeRA and the Legend of Garrison Satch – Pt 1





Garrison Satch walked through the lobby of the old 23 Building on Wall Street and winked at the receptionist. Fannie was wearing red that day and was quick to return a faux-demure smile. However, his thoughts quickly turned to VeRA–not a woman, but a secret initiative launched by the owners of the Building and the New York Stock Exchange. VeRA had her own underground facility that was accessible from both the 23 Building and the NYSE at 11 Broad Street. She also had a street entrance, but...

 
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A Lesson in Transparency by the NY Fed





Chief executive officer and president of the Federal Reserve Bank of New York (and ex-Goldmanite), William Dudley, delivered a speech this afternoon that contains, with supreme gall and irony, a subsection called “Transparency.” The title of the speech was thoughtfully crafted to allow a redirect. So here we go…

 
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A Lesson in Gold Trading by Sideshow Bob





Veteran gold traders can attest that piling onto breakouts, especially in highly leveraged futures, can quickly become a losing proposition on a reversal. While yesterday’s surge in gold was confirmed with gold priced in other currencies, there is a slight seasonal negative at work here until the end of October. Traders should recall that the second week of October 2008 began a painful slide after a strong September...

 
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Waltzin' Matilda up the S&P Ladder





True to form for 2009, anyone trading with a close eye on the fundamentals is getting a major hurt put on, while buying any dip to minor support, such as the 50 day MA, remains as viable a strategy as the most sophisticated SPARC assembly language-optimized HFT algorithm. The order has come down from above, once again today (as it did yesterday), that sellers ain't welcome.

 
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It’s October 1, S&P down 20 pts, you’re Chairman of the Fed. What do you do?





You stare down into the solid gold basin in the second floor executive washroom on C Street, chuckling lowly to yourself. The memory of the impertinent Congressman asking the location of the Fed’s gold—your gold—fades. You catch a glimpse of your perfectly coiffed beard and immediately sober, then smile wryly at your reflection.

The shorts are feeding again at the S&P trough, feeling confident. Let them be confident.

 
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Money Markets are the New Suspenders





The Financial Times recently reported on the Fed’s latest exit strategy to eventually contain the inflation zombie...TD touched on this last Thursday, and we will expand upon it here as it is particularly relevant to our ongoing theory that it is the proceeds from permanent open market operations (POMOs) and their close cousins that are driving equities. Though this may be received wisdom to ZH readers, the Fed has done us the favor of providing additional evidence through the FT story. A bit of background, as we are new contributors to this forum:

 
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