They are doing this again, same as last time at QE2.... Mike explained it here 10 years ago here....
Why are they doing this? To lower rates? Yo rates are GOING UP....
To provide Reserves that banks can “lend out”? Yo you are reifying accounting abstractions idiots...
Here’s Mike FROM 10 YEARS AGO you morons:
The Fed is buying "scale down" and in effect, causing the selloff. They're doing this because they're fixated on quantity ($600 bln) as opposed to price (interest rate). I remember when I was a floor trader. I had clients in the oil business--big firms--who would sometimes want to protect a certain price. They'd give me an order that would be, "Buy 100 (crude), 'worst.'" That meant buy it up...aggressively. When Japan used to actively intervene in FX markets, they wouldn't scale down their dollar buying (or sell yen scale up), they'd buy dollars aggressively to put the USD/JPY exchange rate to a certain level. The Fed is not doing this. By signaling to the market that they will buy scale down, they are actually creating this selloff as nervous longs look to sell before the largest buyer lowers its bid again and as speculative shorts compete for a better price.
Fed initiates major asset purchases and they do this..... EVERY...F*CKING......TIME.....
They never learn....
Bonds probably bottom once there is a MAJOR fiscal response that increases UST issuance rate commensurate with what Fed is now buying every day....
4 comments:
JR they came up with 100b today it’s not even earnest money...
The thing is with these fed morons they change their story all the time...
They were supposed to stop adding reserves April 15 but now they just came out over weekend and say right now they are going to buy 700b total, 500b USTs + 200b MBS...
Theiyre buying over 50b per day so that’s probably 2 weeks and they’re done...
BUT watch once they’re done or before they are going to come out and say they are doing more....
Congress is waiting to see if Fed action does it but it is only driving down risk and now non risk asset prices...
So it’s going to keep going down j til Fed stops this harm they are inflicting...
The. Banks are probably going to need another capital infusion like TARP as Fed is bankrupting them right now...
We get the fiscal which includes bank capital and Fed stops this then we should bottom.... this is the situation I’m looking for before I get back in long equities...
Maybe bonds bottom if Treasury increases UST issuance by 50b per day...
Well that didn’t take long:
https://www.cnbc.com/2020/03/19/the-fed-will-almost-double-the-amount-of-bonds-it-is-buying.html
We’re f_cked....
Mike's rant from 2 days ago was epic!
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