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Highlighted
Senior Advisor

A $T here, a $T there

and pretty soon you're talking real money.

Jerry  Powell's Fed announces an addition $4T of repos to be rolled out over coming weeks.

One overlooked factor here is that the primary dealer banks hoodwinked the Fed into a big repo operation in the fall which lit the stock market on fire- all that extra cash flowed right through the phoney Chinese wall and over to the trading desks.

Fed dealer banks have to be seriously under water here, so no choice but to try to bail them out.

What could go wrong? Actually that's the question that somebody should have asked back in Sept because it has gone seriously wrong. Could be doubling down to be wronger.

Rigging the stock market for political purposes is a dangerous game.

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17 Replies
Highlighted
Senior Advisor

Re: Escape plan for the top 10%. But my question is....?

The Fed move is nothing more than an escape plan for the richest 10%.  The top 10% own 75% of the wealth of this country and a good deal of it is in the form of equities.  In order to escape from equities right now, they need to move to bonds and the only way to have enough bonds is to make more.  Or is it the investment banks are taking this cheap Fed money and buying all these beat-down stocks in order to keep things from really going south?

  But my question is?  The market bounced 1000 points this morning meaning somebody is buying.  Who's buying at a time like this?

Highlighted
Senior Advisor

Re: Escape plan for the top 10%. But my question is....?

Don't know and don't know what to expect but would caution anyone that some of the biggest up days ever were during the dot-com and GFC crashes.

BTW, if the PPT directs the NY Fed to create a $zillion electronic dollars and buy stock indices as a matter of "national security" isn't that really just socializing losses (or profits, depending on where you're long from)?

Would be, to my understanding, an off-balance sheet transaction with magic electronically created $$$.

Effectively Stealth Modern Monetary Theory put in place for the wealthy (i.e., "national security").

The heads of Very Serious People explode at the suggestion that MMT could be used to fund stuff like healthcare, roads, education etc. The Road to Ruin!

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Highlighted
Senior Advisor

Re: Escape plan for the top 10%. But my question is....?

As I've been saying I am expecting some stability as the most likely outcome here, at least short term.

But it may take the PPT giving off a strong Bat Signal before da boyz pile in behind.

Lacking a strong and coherent policy response I think there will be another leg down later.

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Highlighted
Senior Advisor

Re: Escape plan for the top 10%. But my question is....?

BTW, there have been rumors of PPT sightings after 3pm both of the last two Fridays.

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Highlighted
Senior Advisor

Re: Escape plan for the top 10%. But my question is....?

BTW, "done properly" the PPT using limitless electronic cash to put a bid under the indices ought to actually be profitable as everybody else piles in and the shorts get crucified.

Where that "money" would go I have no better idea than I do about the magic place where it can originate.

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Highlighted
Honored Advisor

Re: A $T here, a $T there

When gold no longer backs your money, all you need to do is be the healthiest nag in the glue factory....and we are.  All this spending talk and the US Dollar is in the green 98, cause everyone else is worse off.  The Zimbabwe stock market for all their previous bad press isn`t doing horribly.

https://www.african-markets.com/en/stock-markets/zse  

But the stock market has been rigged for at least 30 years now that care not if it`s a R or D in the White House.  You rank & file Dems would be happy to crash the market if it got in a POTUS with free stuff, but there are some a couple notches higher on the food chain don`t want to kill the golden goose...even if it means "4 more years of that dreeeeadful Trump". 

All it is, is a few more "1`s" and "0s" in the computer program and as long as trains run on time no one that can do anything about it will complain.

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Highlighted
Senior Advisor

Re: A $T here, a $T there

Certainly an element of moral hazard when short term index levels become a matter of “national security” or electoral incumbency.

All that has happened thus far is just moral hazard writ large- a phony Reality TV melt up won’t bother to worry about icebergs.

PS You’re a paranoid whacko

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Highlighted
Senior Advisor

Re: A $T here, a $T there

The market was rising on multiple expansion- other than playing the “better than expected” game, earnings weren’t that good.

Earnings are going to be lower for at least a couple quarters.

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Highlighted
Senior Advisor

Re: What's it tell you when....

What's it tell you when the Fed dump's $5 trillion into the market and the best it can do is recover 600 points after a 2100 point drop?  It's telling me that there's more to come because every time the Fed tries another $5 trillion dump it can't move the needle.

  It's like the Fed is trying to keep the water level in the leaky bucket up when the bucket has a big hole in the bottom.  They just can't keep pouring water into a leaky bucket forever.

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