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More Liquidity Extraction: Fed Resumes Reverse Repos

Tyler Durden's picture





 

Dumping yet another liquidity cold shower in the aftermath of today's less than dovish Humphrey Hawkins speech by Bernanke (and sending precious metals even lower, albeit briefly), is the Fed's resumption of even more purely optical liquidity extractions, however symbolic, in the form of reverse repos, after the NY Fed just completed the first such operation since the dark days of summer 2011. As a reminder, the last time the Fed did these was back in August 2011 which cemented the market's plunge as it gave the market the impression that at least superficially no more money was coming in (intuitively it makes no sense to have Reverse Repos running at the same time as incremental liquidity), even as the reliquification baton was quietly being passed to the ECB. Today, reverse repos resume, as the Fed pays Primary Dealers an annualized rate of 0.17% in exchange for lending out $100 million in Treasurys. Will this continue? It depends entirely on what the economy, pardon, the Russell 2000 does. After all, that is the third and only mandate of the Fed that matter. And if the market considers this an indicator that QE3 really is delayed indefinitely, the FRBNY will mostly likely be forced to reassess.

 


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Wed, 02/29/2012 - 14:49 | Link to Comment trav7777
trav7777's picture

beep beep beep...shit in reverse, bitchez

Wed, 02/29/2012 - 14:52 | Link to Comment Ahmeexnal
Ahmeexnal's picture

yeah Bob, everyone knows you like yours pushed in!
btw...check your mail!

hahaha

Wed, 02/29/2012 - 15:02 | Link to Comment trav7777
trav7777's picture

who the fuck is bob?

Wed, 02/29/2012 - 15:18 | Link to Comment Stax Edwards
Stax Edwards's picture

Beep_Beep_This is a test of the FED liquidity removal operations.  This is only a test. Had this been a actual liquidity removal operation, you would see the equity markets crashing.  We now return to your regularly scheduled programming.

Wed, 02/29/2012 - 15:28 | Link to Comment levelworm
levelworm's picture

What is FED thinking? I agree that this is merely a test, yet a strong suggestion.

Wed, 02/29/2012 - 15:03 | Link to Comment SheepleLOVEched...
SheepleLOVEcheddarbaybiscuits's picture

how crazy is this goin to be when economic data improves and markets go down LOL

Wed, 02/29/2012 - 14:49 | Link to Comment RobotTrader
RobotTrader's picture

Here we go again.

 

Problem:

"Fear" gripping financial markets.

Result:

GLD goes down 4x faster than SPY

http://www.wallstreetbear.com/board/view.php?topic=95602&post=347518

 

 

Wed, 02/29/2012 - 15:08 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Yes, Robo - CBs pull back on liquidity when markets are gripped with fear.

Premise = FAIL

Wed, 02/29/2012 - 15:24 | Link to Comment SheepDog-One
SheepDog-One's picture

Equity markets are like Robo, the kid in the sandbox with the hockey helmet on.....takes em 24 to 48 hours to figure out whats going on.

Wed, 02/29/2012 - 15:45 | Link to Comment donsluck
donsluck's picture

Another buy opportunity for PMs. Had to happen, silver up 30% in two months.

Wed, 02/29/2012 - 14:50 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Maybe they WANT the market to correct?

Wed, 02/29/2012 - 14:51 | Link to Comment RacerX
RacerX's picture

agreed. Just wondering which "they" they are.

Wed, 02/29/2012 - 14:54 | Link to Comment gjp
gjp's picture

If it's PM markets, then they've got their wish.  If it's US stock markets, it seems nothing short of pulling the plug on the Internet will accomplish that.  Otherwise, it's AAPL up 2% per day as far as the eye can see.

Hard to fathom how commodities get killed like that while equities remain untouched.

Wed, 02/29/2012 - 14:58 | Link to Comment vote_libertaria...
vote_libertarian_party's picture

I was just thinking about that.  Who would BB and Geitner rather work with?  My guess is Obama.

 

If you crash stocks now they will be on the upswing in November (possibly).

 

If you keep filling the balloon it may pop in the fall at the wrong time for Obama to get re-elected.

Wed, 02/29/2012 - 14:50 | Link to Comment tmosley
tmosley's picture

Official withdrawl, unofficial flooding.

Should be fun.

Wed, 02/29/2012 - 14:55 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Sounds like they want some people to do one thing and others to do the opposite. But I thought the Fed was on "our" side?

Damn. Foiled again. :)

Wed, 02/29/2012 - 14:55 | Link to Comment JPM Hater001
JPM Hater001's picture

Yes, pay no attention to the other hand...look at this shiny object that makes you laugh (I learned that from the Teller piece thank you ZH)

Wed, 02/29/2012 - 14:52 | Link to Comment PontifexMaximus
PontifexMaximus's picture

Exactly, you got the point: the baton was handed over to collegue Draghi, and his doing his job in a perfect manner. When comes BB's turn?

Wed, 02/29/2012 - 14:55 | Link to Comment DB Cooper
DB Cooper's picture

Could he (Bernacke) be trying to help Europe weaken the EURO which should eventually help Europe help us by not imploding.

Wed, 02/29/2012 - 14:58 | Link to Comment PontifexMaximus
PontifexMaximus's picture

Who has more ammunition to expand the bal. sheet?

Wed, 02/29/2012 - 15:02 | Link to Comment DB Cooper
DB Cooper's picture

Bernacke does but must feel he doesn't need to right now.  Bigger problem is Europe and he doesn't help Europe by driving the EURO to 1.50

Wed, 02/29/2012 - 14:56 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

At least Bernanke keeps things exciting.

Wed, 02/29/2012 - 14:58 | Link to Comment JPM Hater001
JPM Hater001's picture

The market looks like a DUI arrest and 13000 is the line it's suppose to walk.

Again- Does anyone else think the market looks drunk?

Wed, 02/29/2012 - 15:01 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Parron me, Misser Ossifer....sir, why am I breeing pulled over agin?

Wed, 02/29/2012 - 15:22 | Link to Comment VulpisVulpis
VulpisVulpis's picture

What seems to be the officer, problem?

Wed, 02/29/2012 - 15:34 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

[Hiccup]

Wed, 02/29/2012 - 15:24 | Link to Comment MachoMan
MachoMan's picture

HE HAS TO...  from the onset, ambiguity is the only way the magic trick works...  as soon as it is so apparent that even a caveman cannot reasonably dispute the dollar devaluation, then the whole thing collapses as panic ensues...  maybe we get there with $5 gas...  maybe it takes a few oil producing nations to decide to switch the medium they accept in exchange for their oil...  maybe it takes a military loss by the united states...  who knows...

but, in the meantime, there will be ambiguity.

[ps, the money changers make the most from volatility].

Wed, 02/29/2012 - 14:58 | Link to Comment Boilermaker
Boilermaker's picture

Well, golly, if you can leverage 100 : 1 and buy futures, so what?

The heavy hand of the Fed is, as usual, right in there today propping up this piece of shit.  So, really, who gives a shit about some tiny reverse repo operations?  The script is written. 

Wed, 02/29/2012 - 15:00 | Link to Comment PontifexMaximus
PontifexMaximus's picture

Unfortunately sometimes it has to be corrected because rookies make their jokes in the PM markets.....

Wed, 02/29/2012 - 14:58 | Link to Comment MFL8240
MFL8240's picture

This is a fuckin disgrace these bastards are playing games with our lives and money and this has got to end. END THE FED NOW!

Wed, 02/29/2012 - 15:08 | Link to Comment Boilermaker
Boilermaker's picture

You obviously don't know the rules of the game.  This is past the point of no return.  Oh, by the way, you lose the game in the end.

Wed, 02/29/2012 - 14:59 | Link to Comment Jason T
Jason T's picture

just got email from Harry Dent's service:

"Traders,

 

As you probably know, gas prices are soaring, European 'austerity measures' are expected to fail, our own debt situation is a clown car, it's an election year, and Israel will soon attack Iran."

 

Calls our debt situation a "clown car" which got me laughing.  Banzai??


Wed, 02/29/2012 - 14:59 | Link to Comment Paul Thomason
Paul Thomason's picture

The market top is all because of the Jupiter! - check this article out 'The Jupiter Cycle Effect On Wall Street'

Wed, 02/29/2012 - 15:02 | Link to Comment SDRII
SDRII's picture

setup for the oil takedown into the summer driving season and the election ramp. Jesse on gold. http://jessescrossroadscafe.blogspot.com/

 

 

The downdraft in gas will be sold as a stimulus for consumers.

 

Carrot and stocks

 

Wed, 02/29/2012 - 15:03 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I welcome another exciting year for Zero Hedge and a boring year for everyone entertained by TV and iPhones.  While we watch the Fiat Ponzi destroy itself and buy PMs at the best levels, everyone else drones on about Kimmy K's dress size and Bob the Bacholer's pregnant girlfriends.

Keep this shit going, Bernankenstein!  At least so I can keep stacking at these ridiculously low prices.

Wed, 02/29/2012 - 15:11 | Link to Comment SheepDog-One
SheepDog-One's picture

Never going to happen. Everyones got it all figured out 'theyre taking down oil, to placate the bankrupt american, for happy-time election'...bunch of bullshit 100%

Wed, 02/29/2012 - 15:30 | Link to Comment kito
kito's picture

damn sheepie, not only has ben told them qe3 is a wet dream, hes pulling his money OUT of the market!!! shit man, pouring salt on the wound!!!!

Wed, 02/29/2012 - 15:34 | Link to Comment SheepDog-One
SheepDog-One's picture

Yep! Meanwhile stock are still busy playing with cat turds in the sandbox.

Wed, 02/29/2012 - 15:03 | Link to Comment Boilermaker
Boilermaker's picture

All averages now GREEN.

Well, again and again, I tell myself I'll never be surprised by the manipulation.  But, somehow, it just blows my mind yet again.

How shameless can this get?

Wed, 02/29/2012 - 15:06 | Link to Comment mayhem_korner
mayhem_korner's picture

How shameless can this get?

 

Do you really want to find out?  'Cuz yer gonna!

Wed, 02/29/2012 - 15:06 | Link to Comment SheepDog-One
SheepDog-One's picture

Relentless placating of the 401K Bathrobe Brigades....cant have THEM selling before the FED rips everything they own one morning.

Wed, 02/29/2012 - 15:10 | Link to Comment Boilermaker
Boilermaker's picture

Well, yea, but not even a hint of camo?  Just fuckin' out in public now?  My god, this is pathetic as hell now. 

I'll go out on limb....major unexpected and unexplainable ramp up into the close to solidify "13,000"

Wed, 02/29/2012 - 15:10 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Ben needs to reset to "pre-flood" levels so that a "rescue" can be orchestrated just ahead of November 6th.

Wed, 02/29/2012 - 15:32 | Link to Comment SheepDog-One
SheepDog-One's picture

Ok, well....let er RIP then Ben! What are you waiting on?

Wed, 02/29/2012 - 15:20 | Link to Comment Sutton
Sutton's picture

Reverse Repos(April 2010-August 2011)=DOOM

Wed, 02/29/2012 - 15:23 | Link to Comment kito
kito's picture

where are all the whining bitches screaming "qe is always happening!!...ben is printing!!...ben is printing" ?how does one print when hes sucking liquidity out of the market. gold down 75 bitches...ben is NOT PRINTING

Wed, 02/29/2012 - 15:32 | Link to Comment SheepDog-One
SheepDog-One's picture

LOL...and stocks like RoboTarder the kid playing with cat turds in the sandbox will require a couple days before they realize whats really going on. No QE, putas.

Wed, 02/29/2012 - 15:41 | Link to Comment Ullage_Report
Ullage_Report's picture

Whip Inflation Now !

Wed, 02/29/2012 - 16:29 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

Window dressing, pure and simple.  Not even as sensible as starting up an old tractor up at the country place one every six months to make sure it can still start. In case you need it.

If they ever need reverse repos to mop up liquidity, it will quite a show that precipitates its use.

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