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What Just Happened In Today's "Crazy" And Biggest Ever "Window-Dressing" Reverse Repo?
Back in the day, when the sophisticated deep thinkers who effuse deep economic thought, were deeply contemplating whether the Fed's IOER was a better tool to assist if and when (hint: never) the Fed begins to hike rates, or whether the relatively new (conceived about a year ago) Reverse Repo was the better candidate to help push liquidity out of America's bloated financial institutions, we made it very clear that the entire debate is completely irrelevant, as the only purpose of the Reverse Repo was to assist banks in pretending (with the Fed's explicit knowledge) that they have a better balance sheet than they represent.
We did this first in January in "Window Dressing On, Window Dressing Off... Amounting To $140 Billion In Two Days", then in April in "Month-End Window Dressing Sends Fed Reverse Repo Usage To $208 Billion: Second Highest Ever", then in June "WTF Chart Of The Day: "Holy $340 Billion In Quarter-End Window Dressing, Batman", then in July "Record $189 Billion Injected Into Market From "Window Dressing" Reverse Repo Unwind."
Of course, the abovementioned deep thinkers ignored this because it would mean that all the argumentation about the Reverse Repo facility as a means to assist the rate hiking cycle was irrelevant, and that instead of hiking rates the Fed was far more concerned with the collateral shortage that the TBAC loudly complained about in the summer of 2013... just months before the RRP was unleashed (recall "Desperately Seeking $11.2 Trillion In Collateral"). Pure coincidence, right?
Well, the argument largely became moot when two weeks ago, following the Fed's recent announcement Reverse Repo would be capped at $300 billion, leading even the deepest of pundits to realize they have been fooled all along, and the RRP facility was never meant to be a rate hike-facilitating mechanism, the Fed released this:
Statement to Revise the Time of Day of the Overnight Reverse Repurchase Agreement Operation for September 30, 2014
As noted in the September 17, 2014, Statement to Revise the Terms of the Overnight Reverse Repurchase Agreement Operational Exercise, the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York (New York Fed) has been working internally and with market participants on operational aspects of tri-party reverse repurchase agreements (RRPs) to ensure that this tool will be ready to support the monetary policy objectives of the Federal Open Market Committee (FOMC).
Regarding the operation to be conducted on Tuesday, September 30, 2014, the Desk will conduct the operation several hours earlier than usual, from 8:00 to 8:30 a.m. (Eastern Time). All other terms of the exercise will remain the same.
This change only applies to the operation conducted on September 30, 2014. The operations conducted from Monday, September 22, to Monday, September 29, and those conducted on and after Wednesday, October 1, will be conducted at the previous time of 12:45 to 1:15 p.m. Any future changes to these operations will be announced with at least one business day’s prior notice on the New York Fed’s website.
Wait, why did the Fed explicitly warn that just one reverse repo operation would be temporally-adjusted, namely that of September 30, i.e., today? Simple: what is today?
Why quarter end, "window dressing" day of course.
In other words, the Fed ripped off the mask that RRP was anything more than a way for the Fed to allow banks to appear more palatable to... drumroll... Fed regulators. Regulators such as Carmen Segarra, who once again made the news, not only for being fired for daring to ask probing questions about the Fed's "close" relationship with Goldman Sachs, but for providing 48 hours of recording confirming that the NY Fed is merely a branch of Goldman Sachs.
So fast forward to today at 8:30 am when the Fed announced the result of today's "special" window-dressing Reverse Repo operation. What was unveiled blew our socks right off, because not only was the Reverse Repo an absolutely whopping $407 billion, but the low rate on the auction was an unprecedented -0.20%!
And here is what today's operation looks like in historical context:
That's right: at $407 billion, it far exceeded the $300 billion new cap on the program.
So yes: everyone can now admit that Reverse Repo was nothing more than Fed-mandated window dressing, no point in covering that up any more.
But what about that Low rate of -0.20%?
For the answer we go to Stone McCarthy which has done a forensic analysis of precisely what happened in today's "Crazy" (as they call it) Reverse Repo operation.
From SMRA:
Quarter-End ON RRP Craziness
Today's quarter-end ON RRP offering from the Fed included a total of $407.167 bln in submissions, far exceeding the new $300 bln overall cap on the program
As such the 5 bps fixed rate was not applicable, and the allocation was decided by an auction mechanism. Bidders (since September 22) are required to include in their submission a rate at which they would be willing to engage in the Fed's RRP operation. Today these bids ranged from a low of -20 bps to a high of +5 bps.
The Fed by starting at the lowest rate and working upward was able to do the $300 bln max at a stop-out rate of 0%. All awards were at this stop-out rate. Thus the bidder at -20 bps was probably envisioning a stop out rate well above their -20 bps bid.
Today's offering was a test of the program. The Fed conducted this operation at 8:30am this morning in anticipation of quarter-end considerations. Typically the dealine for the operation is 1:15pm. The stop-out rate was even lower than what we envisioned. We were thinking 1 or 2 bps.
What this means is that today's offering was done at a rate below the fixed rate of 5 bps, and thus today the floor aspect of the ON RRP program was not effective. This will probably be the situation at most future quarter-end offerings.
Oops: this means that the RRP as a mechanism to hike rates will certainly fail due to the discontinuity of collateral requirements, which spike at quarter end. Because try as it might, the Fed simply has no way of hiking rates on all other days except March 31, June 30, September 30 and December 31.
Why such a surge in submissions?
As quarter-end approaches dealers typically pare positions for balance sheet dressing purposes. They may also be less willing to engage in matched-book RP activities in helping financing their customers.
The lull in dealer financing demand means that the MMFs, the primary counterparty party to the Fed offerings, have liquidity to put to work that is redirected to the Fed ON RRP offering.
At previous quarter-ends the MMFs have accounted for around 89% of the "take-up" of the ON RRP offerings.
This compares to around 82% on non-quarter-end dates.
Does this argue for a higher cap than the $300 bln?
Not necessarily. The MMFs, of course, wish that cap were higher. If so, such may have provided ample quarter-end investment opportunities with positive interest rates. Indeed, some Treasury bills were trading at negative interest rates in response to the capping of the ON RRP program at $300 bln, previously there wasn't a cap.
The cap was imposed because the FOMC was worried that in times of financial distress (not routine quarter-ends) the MMFs would only engage in lending to the Fed with the dealers and other money market borrowers getting cut off.
Some worried that the Fed might become too dominate a player in the money markets.
The results of today's offering are not really surprising. The Desk probably anticipated something close to what happened here. We think that what we saw in today's offering will be typical of future quarter-ends. Despite that fact that the MMFs would probably prefer a much higher cap, thereby rendering somewhat higher quarter-end returns, what they are earning (0%) is still better than the negative returns on bills that mature early in the new quarter. In other words, the ON RRP program is still a better alternative than what would exist in the absence of this program.
And there you have it.
A bigger problem, however, emerges, now that it is empirically proven that the Reverse Repo is now meaningless and doomed as a means to allow the Fed to hike rates in a world in which the Fed Funds rates is irrelevant, and a parallel rate corridor somehow has to be established. Which means that only the IOER fallback exists, a rate hike environment fallback which as we wrote back in 2012 is also meaningless as it only controls for one half of the rate increase corridor.
So... still betting on a rate hike in mid-2015, when the Fed itself has just admitted, and the market has confirmed, it has no clue how it will hike rates?
We'll take the much, much over.
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lol! I think you're beyond the Chicanery now.
At least least you can joke about it, instead of beating the shit out of it. :-)
Z/H should be "mandatory reading" for violent offenders looking to get paroled.
<chuckle> Yeah....you're right. I guess I can take solace that my stages of anger and grief, especially when they come back from time to time, don't stay as long each time.
And instead of trying to "make a deal"......I just deal.
But, damn, this post left a mark. I may take a few moments just to get stitches. Or like in Rocky II......." I can't open my eye...CUT ME !" (No champ, you can't do that) "CUT ME, CUT ME !"
I've got a few fans myself... I wear them as a 'Badge of Honor'.
For better or worse, someone's listening? It's not my job to interpret the message.
Hell, we'll probably all be dead in 6 months anyways.
I always read what you have to say. When I am around to read it that is. I spend lots of time gone from here.
Thanks fuu. We go back a ways...What ever you're spending your time on, I'm sure it's helping others in a caring & productive way.
It's nice to see the maturity levels increase over the years. (myself included)
All in all, I think Zero Hedge has been a positive experience for me. I've gained a tremendous amount of knowledge.
There is so much music to write, collaborations to produce, and life to live that I almost forgot entirely about after finding Zero Hedge 5 years ago!
POMO in the morning,PPT inthe afternoon,Must keep the DOW over 17,000 at all costs!Pathetic non markets.
To be expected in this TBTF rigged market.
Forget the trillions of dollars, onward to Quadrillions.
Print until Yellen and her money printers swap SDRs.
I need a credit for 0.5T in -0.2% for 50years=)
Simply put it's money laundry or check kiting take your pick. The red ball is under one of the cups, you just never can guess which one.
hey.... um... can someone dumb this down for me some? I've done many things in my life - but an extended study of finance was not amongst them.
I literally have no idea what the fuck the Fed was doing. It can not merely be the cheap and obvious gimmick...like Netanyahu's comb-over, which it appears to be, as I am able to grasp it... which, again, is not especially well.
What the fuck?
I mean, just what the fucking fuck?
I note the icon at the bottom - Tyler, are you going to report this shit?
http://www.newyorkfed.org/aboutthefed/tips_and_complaints.html
No, it is the cheap and obvious comb over. Sorry about that. We;re not supposed to notice; you know, go watch a basketball game, or something ?
Huh? What does any of this stuff actually mean? Can anybody explain this in simple terms?
Repos help the banks off load their leveraged assets in return for cash and thus making their balance sheets look less leveraged on the last day of the quarter. The figures for the last day of the quarter is what is used for their quarterly financial reports. What this means is that for one day, the last day of the quarter, they basically window dress their balance sheet and then the next day they unwind the repo. Lehman used this strategy to hide the fact that it was highly leveraged. One would think that this kind of operation would have been banned after what happened to Lehman but it looks like the Federal Reserve, who is supposed to regulate the banks, is actually helping them to obsfucate their balance sheets.
I basically thought so, but couldn't believe it. Thanks for the plain and simple.
Holy fucking shit - and no one, no politician, no talking head - is going to make a big deal about obvious fraud conducted to allow banks to maximize profits while endangering, once again, the entire system...
the point of the reserves and foreign bailouts in part, I suppose - just another way for the Fed to steal from taxpayers' labor and, in the not too distant, buy more assets at fire sale prices.
And nobody seems to notice, nobody seems to care...
The repo market is such a specialist market used only amongst primary dealers so it is not something they ever talk about on CNBC or Bloomberg TV. I am sure that politicians have probably never heard of the repo market and let alone the wider public. ZH is doing a great job of informing the wider public of these fraudulent activities.
http://www.newyorkfed.org/markets/rrp_faq.html This is to say that in an ON RRP the FED is putting assets on the books of the banks instead of removing them. The fraud is still there but to describe the transaction correctly then is to illuminate a so many other dark passageways that otherwise would go unseen. The banks are not raising fresh currency for a day; they are boomerangging high quality collateral.Well, some people care. First of all they have to understand that its happening and then they mostly do care, I would think. But mostly they don't know; I need another drink. Sheesh; at 11;55 on Tuesday ? Oh, well.
WHAT (this is not /sarc)!?!?
You are saying that banks can offload some toxic waste for a day, get cash for it ("cash on the sidelines"??) only to receive back the toxic stuff the next day and paying back the money? It's like "could you please wire me some money just for a day on that account so that people won't see I'm bankrupt? I'll give it back tomorrow"
I'm totally aware that I sound very naive now, but this can't be LEGAL!!!!! WTF!!
I'll go to the streets tomorrow with a fucking sign "Reverse Repo = Crime! Jail all banksters!"
Let's see if I make it to TV.
PS: Wouldn't the FEDs balance sheet look much worse on the last day of each quarter? Or where do they hide those "assets"
That is basically what it is for, window dressing. I'm not too sure how it affects the fed's balance sheet but would hazard to guess that they (the Fed) would keep this operation off-balance sheet.
What we need is a Carrington Class Solar Event to fry the networks when the Fed and the Banks do this next quarter.
https://en.wikipedia.org/wiki/Solar_storm_of_1859
In June 2013, a joint venture from researchers at Lloyd's of London and Atmospheric and Environmental Research (AER) in the United States used data from the Carrington Event to estimate the current cost of a similar event to the US alone at $0.6–2.6 trillion.[11]
$0.6–2.6 trillion.[11]
Fucking low ball estimate of all time.
I'll give you a better figure.
It will cost fucking everything. All of it, and everything sill won't be enough.
Also, usually, some interest changes hands. In this case it was 0% though.
Oh and thanks a lot for the clear explanation. Really appreciate it.
thank you for the clear explanation Maneco.....and Thank you Tylers for the brave postings.
thank you for the clear explanation Maneco.....and Thank you Tylers for the brave postings.
Excellent summary except that you left off "the low rate on the auction was an unprecedented -0.20%!"
The actual awarded rate was 0.00% but one dealer bid -0.20% which would have meant they would have gotten paid by the Fed for doing the operation.
...which means the FED is forcing the money on the banks and gets back less than it actually handed out.
And please correct me if I am wrong: 0.2% of 400 billion means the FED is paying an average of around 2 million USD for a single day for this operation.
Makes total sense. The sheeps (like me) will never understand.
Nice, thanks
Yes. The Fed is helping the banks to look like they are in better shape - at quarter end, when they examine the books - than they actually are.
In other words its corruption. At the highest levels.
And in case you forgot:
"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." – Henry Ford
What's SEC's opinion on this corruption? Misleading financial statements are a crime or no?
The SEC; ha-ha-ha. hic. ha, ha.
What's their position?
Thier position will be mail clerk @ at Goldman for twice what they make at the SEC...and a double ration of tranny midget porn to boot.
These doors are revolving doors, see.
The alternative position is an inverted one.
From the 60th floor balcony.
It's an attention getter, I'm sure.
It means you've been horsefucked, Bernoulli.
Hm. Doesn't sound so pleasant.
Yes.
All charts, data, and financial/economic values furnished by anybody, are -null. Trade accordingly.
Can anybody explain this in simple terms?...
I think it means the High Priest entered the Holy of Holies and sprinkled blood on the Mercy Seat. All sins are now effectively hidden by / at the time he comes out.
Party On Dude.
jmo.
Can I get some of the stuff you are smoking?
some of the stuff you are smoking?...
Beats vapored hash oil.
http://www.mljtrust.org/sermons/the-blood-of-jesus-christ/
If I'm not mistaken Lehman used Repo 105 or 108 to window dress its balance sheet and look what happened to them! As if that was not bad enough we now have the Fed helping the TBTF banks to do exaclty what Lehman did. You could not make this up.
well, somebody made it up ! It's certainly not real. sort of.
So, like Fukushima, it's too dangerous to fix, is that about right? So, the system will fix itself when it detonates!
Now, now; t here's no use being pessimistic. look on the bright side of life. I'm sure everything will turn out hunky-dory.
exactly! that's why ZH is vital. ZH helps us to spot some of the comets, icebergs coming our way; the forces at play: between the banks, israel, iran, putin, fuku, SA, ebola, brics, finite resources, the environment, drought, food and water---it may (for some, fonz) seem as though change is a long way off...but i feel it's more akin to the boar scarer and that the resounding bang will come, there simply isn't enough counter-balancing the inevitable. it doesn't mean we can't enjoy a stroll along the beach, or savour a feast of seafood and halibut, or as ene news reported today, dive into our organic west coast fuku lettuce, it simply means some of us are aware of what exactly we are eating, and that the horizon we are gazing at is finite indeed. moreover because we can 'see out far and in deep' we may be better prepared to assist, help and mend.
Spotting the iceburg doesn't help much. There's no comfort in knowing what sunk you.
But...that doesn't matter...as surely, this ship is unsinkable.
Unless it's not.
indypat,
certainly you are correct...it's simply some of us prefer to know what hit us, while others enjoy the surprise bat outta hell.
Save this file and the links. This stuff will be used in the future financial terrorism trials when the banksters are prosecuted.
Trials take too long.
Alcohol fueled Hemi Wood Chippers don't take too long.
Seriously, the only people who are going to get screwed on this are the post 2011 crowd that uses the term "stawks".
This is an excellent piece [although in part a little over my head - I get the basics]. Great work, ZH!
You mean the part that it's free, just not for thee?
The MacroPrudential Masters of OZ, will destroy the financial world, or die trying to rig it and live happily after!
How is the FED going to raise rates? it can't
It's sucking intrest out of every interest bearing account
screwing everyone out of billions and biilions of dollars globally
allowing foreign banks to borrow interest free from us the tax payer
and would make servicing to U.S. debt impossible
18 plus trillion how do you service that shit?
David Stockman had a really good post on his blog explaining the churching on FED paper to short term notes to hide
our debt issue.
I bet he did. He's got a pretty good idea what's going on, alright.
I am with Bouncy..
How can interest rates EVER be raised without collapsing everything?
Easy peasy. Just drop the manipulated price of OIL.
I'm getting my cash out of the bank this afternoon.
You're right. I read toilet paper was the first thing that disappeared in Argentina and Ukraine.
Heading to Costco.....RRrrright NOW !!!
Long Charmin !.......and Georgia Pacific
double down on Depends wouldn't be amiss
In laymans terms, MMF's (money market funds) have decided that it's cheaper to hold their funds then lend them to the Fed.
This means the Fed. has no mechanism for rate increases because demand(lack of liquidity) doesn't exist.
These MMF's would rather hold the cash because the spread between short term note expiries and carry costs is still more attractive than offloading excess reserves to the fed. (which were bid @ minus 20 basis points and settled at ~0~)
man this is depressing, i am going to need a cigarette, a coffee, a shot of whisky, a joint and a line of coke to cope
You don't need all that. Go git some, that is, if your not at a college campus, because then it's safer to do the drugs.
Morphine; morphine works much better. Field Marshall Goering was able to believe three or four ridiculous things before breakfast every day; and all because of his morphine. Un-fortunately, it's a little hard to get ahold of.
....pssssst. Hey SAT. Eastern Kentucky says they got ur hook up. First one is free, per etiquette.
They take FRNs...for now.
kinda funny in a really dark, the end is near sort of way. you have to give the fed and all its member banks a lot of credit for what they have managed to accomplish in the last 6 years. putting aside the rico nature and the blatant lawlessness the tbtf entities in the usa have managed to save themselves through the really ingenius manipulation of money flows directly and through fed interest rate policy.
they have run into a wall. the system cannot exist without inflation creating the room for ever increasing credit expansion. without inflation the system starves then collapses. interest rates cannot rise in this environment unless as an indicator of increased risk, not the kind of rate increase the fed wants. the question is what the new path to real inflation will be. direct cash infusions in some politically accepted form would work(tax breaks) or a direct from the fed cash voucher allocated monthly could be a sort of trickle in indirect jubilee allowing consumers to consume or pay down debt both of which could delay the minsky moment for long enough for me to retire to a foreign country on the brics side of things.
in any case, inflation was, is, and always will be the underlying salvation of all fiat currencies. trade accordingly.
"you have to give the fed and all its member banks a lot of credit for what they have managed to accomplish in the last 6 years."
No you don't. You have to give them a rifle butt to the head and then a good delousing.
Drive smaller liquidity shell companies into the mass pool to spike swim or sink trading type platforms, sell at high, redistribute gains back into shell company. repeat process..
But, but, but......Peter Schiff said gold to $5000. Will he give me my money back? I lost a ton because of him
Did you sell?
Will you give him the money if it does go to 5000$?
makes you wish for ENRON accounting...when frauds were simple
Ah, the good old days. when real men spent their three hour lunch breaks at titty bars; and then thought up another way to fuck over the public, and laughed about it all the way back to the office.
I'm beginning to like you.
If they had only stayed under the radar a few more years they would have gotten away with it. I don't think they could be convicted in the current regulatory environment.
Not to give "regulators" something palatable, to provide the rats cover - plausible deniability.
The FED spends an inordinate amount of time trying make everything look good, when it really doesn't matter. Everyone knows that the FED will backstop ANYTHING hte criminals on WS will do.
They must believe that perception matters, how quaint....
"I guarantee that if they haven't yet already tried (through various methods), there will be serious attempts to disrupt and/or take down Zero Hedge's news & information feed flow."
I feel that the trolls are trying to do this. They are trying to dilute the value of the site.
stu11- "how can inerest rates ever be raised without collapsing everything?"
I've been game planning this for a bit but still have some grey areas to figure out so here it goes.
With the US now being a larger oil producer we now have a resource more than what we used to have to stave off the exiting from the petro dollar. However i believe that oil/ natural gas will be revalued in terms of gold which will be very high. With the high price as it relates to the higher gold price the new revenue will offset the increase of the servicing of the debt via raising interest rates.
Edit- almost forgot one important aspect of my theory. the US can sell oil/ng to the chinese in exchange for our treasuries they are holding.
Also, does anyone else think that natural gas prices are being suppressed the way gold and silver are? I know there is a lot, but if the future is NG wouldn't people see a undervalued asset that would increase over the next couple of decades?
I would be especially honored if Fonzanoon gave some input on this. Maybe he will point out any false thinking.
P.S,- If anyone wants to really scramble their brains try reading about the tri repo market. how can any of that shit be legal?
Rhetorical question--does the US have gold? I'm not referring to some reserve possibly fictional vault somewhere, I'm referring to gold mines like old times. Or does gold also have the equivalent of unconventional acreage, that's just harder to get out of the ground?
I like your optimism...I'm not sur if gold, chinese yuan, or bitcoin is the answer. What I do know is things that you need to live (like air, water, food, shelter) should always hold value...
Whether the Fed can control rates or not is going to be the least of our worries here shortly.
We all better make damn sure u and ur loved ones have some kind of an exit strategy from the damn squid grid. Even if just for a week or 2.
Spidey sense is tingling.
U better be ready.
I have to go and buy some booze however,
is it possible to mint 5, 1 trillion dollar coins say made out of copper
this is the hard part elect a non-corrupt president, say make Ron Paul Sec. of treasury
flip the coin to the FED say fuck off your paid in full and disolve?
wasn't this little Timmy's idea when he was before congress? the coin I mean?
forgot the fucking "have"
Most days I think it's about the money - days like today I think it's about power and control - so which is it?
After a cursory scan of article and posts it doesn't appear anyone has pointed out that Sept 30, 2014 is the USA, Inc governments fiscal year end
Well, there you go; now we get to start out on a whole new year; a fresh and wholesome adventure into an un-discovered land of financial wonders and miracles. It'll be wonderful. (I finally found the emergency Morphine).
Listen Zero's.
This guy his name is "Stone McCarthy". Wow, what a name. Stone McCarthy.
Stone McCarthy. He sounds important no? What did he say?
He said, Bill fucking Dudley, that's what!
Maybe one of the Tylers can let us know his opinion as to why at the beginning of Bernanke's first term the Fed stopped publishing M3? Why in 2006 during the fat and sassy days of the bubble, when everyone knew it was a bubble but loved it in spite of that fact. Bernanke decided to save money calculating M3 and told us to guess what it was.
And one of the major components of M3 are repurchase agreements.
Granted in 2006 repos were not a significant number then. But after 2009, the repo pumpkin turned into a Formula1 race car and took off, thanks to our fairy godfather Ben Shalom.
Was it just a coinkydink that in 2006 the Fed terminated the public's realization of M3 and its repos, to save money.
Or did Bernanke and the Fed have a presentment that the sub-prime bubble was going to go nuclear and and that the repo instrument of the Fed would soon be put to Yeoman service.
Thanks in advance. I'll hang up and take your answer offline.
That is national security top classified information. Few people know how much USD is really around.
Few people with high clearance really know when secret QEs started. I've seen arguments it started in 1994, but others are saying it started in 1982
I am in the 1994 camp. Actual real, real QE started in 1994 and that is the year gold started taking off.
I'm afraid your idea is not nutz enough for me. I like conspiracy theories that can lead to electric shock therapy.
*****************
1956 Hubbert predicts peak oil for America. 1973 his prediction is realized.
The Pentagon wakes up to the fact that oil is not forever and they are the largest consumer of oil on the planet. They get antsy. A few years later Iran scoops up its marbles and goes.
A few years after that the Army decides that democracy and capitalism are a luxury that the Army can no longer afford.
("If it were done when 'tis done then 'twere well It were done quickly")
They approach the then Chairman of the Fed and ask him to devise a scheme to crash the global economy and reduce the consumption of crude oil while they skirmish around to install puppets in oil rich countries.
Now we have all seen the success of Greenspan's plan to crash the global economy: The Sub-prime Bubble.
In 2002 as Greenspan readies himself for his last 4 years at the Fed, he has Ben Bernanke, the depressionologist from Princeton, made a governor of the Fed and chairman in waiting.
The rest is history. And has nothing to do with gold.
:-)
All of that rings logical to me. No objections
still it's kind of a bummer
Greenspan did not know what hit him on March 10th 2008 @ 11:00am Bear Stearns time. Neither did Geithner, Bernanke, Rubin, Wolf, Paulson, Blankfein, or Summers. Greenspan was not bright enough to understand the mathematics of expectations whatsoever. Neither did Professor Emeritus Milton Freidman, or Professor Emeritus Maynard Keynes. Admittedly, Greenspan's doctoral thesis is all about subprime housing bubbles, but I really don't believe that any central bankster understood what was manifesting when Bear Stearns took a dirt nap. Everyone was flying by the seat of their pants and still are today. That's 28 successive business quarters of obfuscation on the part of the central banksters to date, I think.
Who's counting anyways?
Oh yes, Greenspan knew.
The Fed and the Treasury knew enough to deceive Wall Street, the banks, the corporations and the American public about the recession that was identified in November 2007, keeping it hidden until December 2008.
As a matter of fact, today it is called "The Recession of 2007".
They kept a recession, which occured during a Republican administration, HIDDEN IN AN ELECTION YEAR.
IT DOESN'T GET ANYMORE CORRUPT THAN THAT
Do you remember when Paulson invited to his office Obama, McCain, Pelosi, Reid, and their Republican counterparts for a meeting less than a month before the election?
Pelosi was photographed when the meeting was over looking like she seen Satan's weenie, McCain wanted to suspend the campaign.
A month later Obama was elected to take the Titanic down.
And down he took it.
I am not here to defend the Central Wanksters: I was hatin' on "Maestro Magoo" WAY before it was cool - as far back as 97-99, when he was Chairman Chicken Little, shilling and pumping fiat for the Y2K Management-Consultant Feeding Frenzy.
You're absolutely correct that these professional parasites know fuck-all about expectations.
HOWEVER: their ignorance is understandable. Their actual job has fuck-all to do with expectations, so why should they bother knowing about them?
Their actual job is to aid the transfer of wealth from the tax-base to the crony-base - in the same way that the Inquisitor-General's job was not to actually get rid of witches, but to maintain the public's faith in (and fear of) the Church, so that Popes and Cardinals and Bishops got to live in palaces.
Once that is taken as a core objective for all members of the political class (including political appointees - judges, generals, heads of bureaucracies etc), everything makes sense, and policy analysis is far easier.
Scalia and his robed geriatric cronies; Greensplatt and Bukkanke and their cohorts of charlatans; Boehner the Orange and Pelosi and Co.; Cheney, Bushbama, Clinton... they're all the modern equivalent of the mediaeval senior priesthood. They know that their entire edifice is a lie, but they don't care. All they care about is making sure that the majority of the serfs believe in it: that way, the priesthood gets rich beyond the wildest imaginings of any serf.
Price action is all. I don't look at news tickers; I don't know or care what day the Fed-heads talk; I don't look at or care about economic releases (sometimes I see news by accident - I bought Air France two weeks ago when I saw news about the strike on French News). I watch price; I buy deep oversold, and sell deep overbought (with some other nuance baked in).
Result: not a single losing trade since March 1 2014. 134 closed winners in a fucking row across DAX, S&P, Dow, Nikkei, ASX200, 10- and 3-year bonds, Gold, EURUSD, AUDUSD, GPBAUD, EURAUD and a couple of pure stock plays (e.g., Air France). (My broker will gladly take calls or e-mails seeking verification from doubters); roughly 2/3rd long and 1/3 short; average trade gained 1.58% of total capital.
Odds against that (assuming markets are a random walk, which they're not): 3,000 TRILLION TRILLION TRILLION to 1. (Do the math: 134 coin tosses in a row has odds of 2^134 to 1 against).
Ignore the priests; focus on price; bet against the herd at extremes (|CCI| > 200 on an hourly is one key metric). The freedom of not even having to bother about stops is intensely gratifying.
Umm, fellow ZH readers: If you give me money, I will gladly charge you -0.20% for the procedure and then give it back sometime in the future. Just trying to be of assistance here.
www.traderzoo.mobi
Can I email you my bitcoins?
Federal Reserve in conjunction with NSA can control anything it wants in the financial system. It is just a video game now.
You want dow at 30k by end of october? Baaam, you have it
You want 10year yields 1% by end of next week? Baaaa, you can have it
The only problem is that the world will abandon the system.
Hence, Fed is forced to do system clean up every 6-7 years or so since Nixon delinked from gold in 1972. It took 15 years for too many dollars to be created clogging up the whole system.
Hence, 1987, 1994, 2000, 2007 and 2014-1015
There's just too many dollars around. The excess of dollars needs to be wiped out, or the world simply walks out
It's that simple
How do you think they wipe them out?
Margin or collateral call to all the leveraged parties which is basically..........everybody.
3 ways
- Rate hike
- Draining dollars
- Dumping of commodities
All 3 trigger derivative collapse
This is a problem only if facts matter.
Problem solved!
30 September 2014, What Just Happened In Today's "Crazy" And Biggest Ever "Window-Dressing" Reverse Repo?
18 September 2014, Lurking Beneath The Taper: More Trouble In Repo Land (Zero Hedge)
16 September 2014, Fed Seen Doubling Reverse Repos to Raise Interest Rates (Bloomberg)
22 August 2014, Bullard Sees ’Several Hundred Billion’ of Reverse Repos (Bloomberg)
12 July 2014, JPMorgan Blows Up The Fed’s “We Can ‘Control’ The Crash With Reverse Repo” Plan (Zero Hedge)
10 July 2014, The Current Repo Fails Issue Rebukes Any Notion That The Fed Is In Control (Zero Hedge)
07 July 2014, Bond Anxiety in $1.6 Trillion Repo Market as Failures Soar (Bloomberg)
01 July 2014, Record $189 Billion Injected Into Market From “Window Dressing” Reverse Repo Unwind (Zero Hedge)
30 June 2014, WTF Chart Of The Day: “Holy $340 Billion In Quarter-End Window Dressing, Batman” (Zero Hedge)
LINKS: http://forum.prisonplanet.com/index.php?topic=259725.0
Warning, Warning, Warning ... few au, ag bids slamo readied!
I'm not fazed.
...sorry.
The fed exists for the purpose of manipulating the market, among other things, and by any means necesary it would seem.
The stock market is a sham. Value is a concept which does not apply unless you are a sellside con artist.
It does not make sense to get too righteous if one choses to play in this snakepit.
What's the difference between Goldman Sachs, the FED's reverse repo
shell game, and the Mafia using the Vatican Bank to launder Pablo Escobar's cocaine cartel billions? I'm not hip to exactly what level of sleaze we are reading here with regard to reverse repo shell games, but I do get a sense of the stench in the Z/H air given the above article. Methinks the whole system has finally imploded in slow motion over there on Wall Street. This must be America's 'let them eat cake moment' in history. When is Ebola going to kill everyone off, I can't wait anymore?
OCCUPY REVERSE REPO FED SHELL GAMES - OCCUPY EVERYTHING
Is it relevant that $107 billion more was "submitted" than was "accepted"? i.e. could it be that the institutions asking for the $107 billion - and didn't get it - wil not look so financially-safe this quarter (they didn't get their "window-dressing")?
On the currenty front, the Yen is toast, about ready to punch through the 110 rate (as Japan's structural problems may finally be weighing on the market). Euro cratering as the ECB looks to be stepping up to buy some of the most toxic soverign debt in Europe. The Ruble is absolutely getting destroyed and other emerging market and smaller developed country currencies are getting hammered as well. The Pound just had a major health issue with the Scotland vote and doesn't look to be on very sound footing. The Yuan has some legs but mainly only due to its tag to the USD. Basically, there is no currency option available other than the USD which presents major problems for the world's CBs. If other countries are forced to raise rates to protect their currency (a big if as most don't seem to give a shit about the devaluations), the risks will be significant on the economic front.
On the commodity front, gold (yes I know gold is really a currency) will soon breach the $1,200 mark and could eventually test $1,000 if things continue to implode with silver's bottom looking like $15. Oil, once this slams through $90 the fracking industry (and more importantly, the banks that have loaned to the fracking energy companies) will start to feel some real pain. Most base metals and grains are dropping in value on almost a daily basis right now. As for real estate, China's market is in a full scale retreat along with large parts of Indonesia (and Hong Kong most likely to follow). Even the US real estate markets are starting to feel the effects of over valuation and have reached the tipping point of moving back into a full scale retreat.
The USD is increasing at an alarming rate (really, too fast for even the Fed to manage/address) and the US stock market is being held up by only a few remaining blue chip stocks. HY debt is under pressure with IG debt still holding up.
Why do I mention all of this, well for three reasons:
- First, there's nowhere to run right now as the pain in asset price corrections is going to be deep and broad. Even for the PM investors out there (including myself), its going to be very important to remain patient in this market as PMs are bid below FMV (at least on paper which will support the flow of PMs from west to east).
- Second, every single sign I'm seeing right now is that deflation, the most feared word in the CB world, is firmly taking hold. Deflation has taken control of commodities and will soon consume financial assets as well. While this may benefit the USD in the short-term (anywhere from 2 to 3 months to 2 to 3 years), the long-term damage from deflation taking hold on hugely indebted countries like the US will be devasting.
- Third, it should come as no surprise that all of this is occuring as the Fed winds-down its QE program of buying assets. Thier printing induced orgy has now come full circle with everyone leaving the party with STDs. The Fed thought that they could leave the party and treat the illnesses it created with some over the counter medication. Think again as by early 2015, doctor visits will be required if not outright hospitalization.
I have to figure some hedge funds are going to have some serious problems with the speed of which deflation is taking hold and the USD is increasing. There has to be some books out there that are under some real stress given the rapid changes in values occuring in numerous markets. The timing is right on as it usually takes about 9 to 12 months after the Fed changes policy for the market to react. The 4th quarter may be quite a ride but my money is on Q1 2015 as the world finally wakes up and realizes the global economy is truly FUBAR.
As for the play on the USD, well with everyone moving to the same side of the trade, the near term looks supportive of continued increases but when everyone moves from this position at the same time, it truly will be one for the record books.
Some HFs are already positioned that the days of fearing the printing presses are over. CBs (except China) have created segments (commodity, currency. bonds and equities) that you can arbitrage with the irrelevance of the Fed Funds and other anchors.
The various market segments gyrate around borrowings at negative rates and zero create arbitrages. The collapse of price signals rip thru the whole spectrum of trade and investment flows.
Inflation/Deflation are meaningless terminologies where the bands of zero and negative for prices across different market segments will widen the more the CBs lose controls. (A harbinger of the detachment of the tail of the financial economy that has wagged the real economy. When the tail falls is the question ? ). Wishing it to fall soon is just a wish as there are too many moving parts.
Talking about trading and not investment in debt laden rigged markets. The best chance for survival (no guarantee) is to stay far away from the Predators unless you are a trader dancing with blips on screens shutting of all noises.
Mean time Putin puts his hand in pension funds to "help business in trouble"
Cash-Strapped Sberbank Turns to Russian Pension Funds, Insurance Companieshttp://www.themoscowtimes.com/business/article/cash-strapped-sberbank-tu...
To help end-users, regulators backed off an idea that would have required banks to force non-financial firms to post collateral if they crossed specific thresholds of creditworthiness. Banks will instead be required to collect collateral according to their own assessment of clients’ risks...
http://www.bloomberg.com/news/2014-09-03/u-s-regulators-set-to-tighten-s...
Let's see if I have this straight- the Fed has found a way to give the financial institution quarter ending window dressing, and it costs the institutions literally nothing at all? What a scam!