S&P Above 1400 As Fed Conducts Second $600 Million Repo Following Nearly 4 Year Hiatus

Tyler Durden's picture

Last week we explained why while endless promises of Fed intervention may be enough to confuse the market and force endless rounds of short covering as weak hands are flushed out of positions under threat (but never action) of central planning, banks are no longer in a position to delay indefinitely the moment they have all been waiting for: a $500+ billion reserve injection which will allow them to go hog wild in investing in risk assets or plug capital shortfalls (off the books of course), and otherwise continue their lives in a ZIRP environment which makes net interest margin existence impossible. We also showed that for the first time after nearly 4 years, the Fed conducted a regular (not reverse) repo last Friday. As we explained, regular repos are liquidity injecting, and while the Fed may promise these are merely test runs, everyone knows they are anything but, and are merely a telegraphing to the banks of what is in store. Today, the day after the last repo expired, we just got a new 3 day repo, only not for $210 million this time, but one for $600 million, including not only Treasury, but also Agency and MBS securities. The result: S&P above 1400 for the first time in months.

From the NY Fed:

And this is how the history of the Fed's various repo operations has looked like in the past 4 years.

Sure enough, the S&P just went above 1400 like clockwork.

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walidsassia's picture

and what is next ? 

slaughterer's picture

"and what is next?"

SPY 142.53 / ES 1423.50

francis_sawyer's picture

The only way the $SPX tanks now is if I go ALL IN on otm SPY 150 calls...

LawsofPhysics's picture

Do it Francis, I'll be happy to take the other side of that trade.

francis_sawyer's picture

No way Jose...

The only way I keep my sanity [which, arguably, is hanging by a thread], is to stay completely away from paper markets...


Oh ~ that AND, the occasional cheap entertainment value I get by ruffling the feathers of peacocks... which is an artform in of itself... :-)

Precious's picture

Park your car in any major city.  Pay for the parking meter, hotel parking or parking lot.  Then try to tell us there is no inflation.  Not only is there inflation --- it's up about 100% in the past 5 years.  Unlike chicken, eggs, milk, pork, vegetables and fruit, you can't make many more parking spaces.  Not without covering equally inflated unionized labor and healthcare --- and maybe not even then.

vast-dom's picture


Xibalba's picture

I believe it's referred to as 'monetary policy'

Stock Tips Investment's picture

SP-500 will test 1,420 points. If this level breaks, would have a good chance of dealing with 1.570 points, which represents 2007 high. if it fails this purpose, we would see a new leg down. Today in my blog there are two very interesting post on this topic.

stocktivity's picture

In the old days...when charting made sense, you may have been correct. In these rigged markets, only the large Wall Street banks win. As long as the printing presses can keep printing, It's all Bullshit!

Meesohaawnee's picture

dead on. why do some still try to apply technicals to this joke is beyond me.

Cognitive Dissonance's picture

I just love it when they mainline the (leveraged) fiat directly into my blood stream. What a freaking high. Was that as good for you as it was for me!

<sigh> I love Bernanke!


Dr. Richard Head's picture

Freebasing fiat has replaced bath salts and the bankster zombie apocolypse continues. 

Cognitive Dissonance's picture

Bernanke is The Candyman.

"The candyman mixes it with love to make the world taste good."

fuu's picture

They call him Cumulonimbus, because you know he makes it rain.

Oso's picture

We knew this was coming, the Fed never removes its hand from the market.  No one, least of all politicians, understands the effects of repos.  What better way to levitate everything while the world crumbles.  Anyone shorting now is martyring themselves.

CD, long time, hope you're well.

Meesohaawnee's picture

like ive said a thousand times. theres a short ban just like Europe. We just do things in stealthy ways here. no different. At least the eurpeans have the balls to tell everyone

Jlmadyson's picture

2008 is fully back but this time with all the mountains of debt that have ballooned since.

We all know what this means. They are losing control again.

The real question which banks are needing them and remember this after Bernake telling us just last month our banks are much better capitalized since the 08 crises.

If so then why the desperate actions again?

Hype Alert's picture

It's like a kid jumping over a coffee table.  They do it once.  Then again.  Then every time they go through the room.  Then one day, maybe they're tired, shoe isn't tied or somebody parks something on the other side of the table.  If that doesn't happen then they get a longer table to jump or people stop caring and start leaving things piled on the table.  Moral hazard happens.  Risky behavior rises to the point of failure.  People think they ARE THAT GOOD.

Winston Churchill's picture

Looks like the SBS is freezing up.

How long can this Wily E Coyote moment last until gravity asserts.

Get the hell out if you are  still in this 'market'.

Strange how those inverse  ETF closed down last week.

More and more signs of imminent collapse.

buzzsaw99's picture

<--- doin' it for the people

<--- doin' it to the people

francis_sawyer's picture

<=== 1500 first

<=== 600 first

slaughterer's picture

Is Ron Paul going to investigate this mis-use of Fed funds?  

Widowmaker's picture

Ron Paul is going to bark and jerk off like he always does.

Supporting that bastion of distraction only wastes your time and ensures nothing changes.

JR's picture

the most dangerous man in the world to TPTB...

Ron Paul Barred From Speaking at Fascist RNC Convention in Tampa

Posted by Lew Rockwell on August 6, 2012 08:21 AM

Even though this is an outrage in one sense--Ron Paul is one of the very few non-sociopaths in Republican politics--it also makes sense. After all, he would have been required to Heil Romney in his speech, in words written by the Mittster's minions, and that is something Ron Paul would never do. After all, Romney--warmonger, Keynesian, bankster, nationalist, gun-controller, socialized medicine advocate, dronist, torturer, police statist--is the exact opposite of Ron Paul. Romney clearly yearns to commit mass murder against the Iranians. Let's face it: Ron Paul is far too good for the Republican party. And in what passes for its heart, that criminal organization knows it. (Thanks to Travis Holte)


GMadScientist's picture

Heroin junkie scores two methadone suppositories. Film at 11.

Hype Alert's picture

But things are better.  Things are so good there's talk of New QE.  And Europe's better.  How ever can this be?

john_connor's picture

Tulip Bulbs Bitchezzzz!

Bastiat009's picture

S&P500 has massively outperformed gold so far in 2012, for the first time in a very long time, without taking dividends into account.

Can HFT keep it up forever without ever taking reality into account?

CvlDobd's picture

I'll be happy to buy your gold from you if it gets you to stop bitching about a voluntary investment you made all by your lonesome.

Bastiat009's picture

Stating facts is not bitching.

CvlDobd's picture

Well that's my mistake. I see your name, then gold, and I figure I should take your comment as a form of bitching about gold.

Dr. Engali's picture

I feel wealthier already. I think I'll go out and buy me a new house and car...financed of course. That wealth effect has me feelllliiinnng good!

q99x2's picture

I'm in for the election ramp. Then they're susposed to start killing arabs again. That's always good for a few 100 more.

By then it will be world central bank circle jerk time and into 2013. People will be starving everywhere.

Everybodys All American's picture

Is this essentally an open ended QE? Are we at QE infinity here? It would appear the answer is yes.

slaughterer's picture

This is as close as a sign that we are re-living early 2008 as one can get.  

Meesohaawnee's picture

im a novice? can you explain why?

emersonreturn's picture

thank you Tylers for your vigilence.

TwoJacks's picture

phenomenol.  I've moved to trading grains as the equity game is just too obviously rigged. good luck

john_connor's picture

The Fed, Caffeine, AC/DC, discount window access, and a T1 connection.  What else does one need?


TheFourthStooge-ing's picture

Bath salts, crystal meth, a machete, and an oxy-acetylene torch.

razorthin's picture

Now is the time to sell.  Got the guts??

Haager's picture

I have nothing to sell.

slaughterer's picture

IBD readers will be buying many cup-and-handle breakouts today on the IBD 100.  

Cognitive Dissonance's picture

Lots of technical triggers being tripped today. Trying to spook the herd into buying.

razorthin's picture

That was actually last week.  Now we're just overbought on anemic volume.  Actually, it's worse than that - At 10:50 I can hardly see a daily or a weekly volume bar on SPY.

unununium's picture

"for the first time after nearly 4 years, the Fed conducted a regular (not reverse) repo last Friday."

Isn't that just a smidgen misleading, given the multi-trillion in permanent injections that happened over those same 4 years? 

Oso's picture

those were outright purchases, not repos.