The $90 Billion Short Squeeze – Professional Edition Fed Report

The Fed and Treasury announced more new programs to boost market liquidity, and the stock market took the money and ran, for today at least. The Treasury announced the sale of $119 billion in new Treasury bills and CMBs over the next week. That does not include the 4 week bills or 2 and 5 year notes to be announced Monday. It’s a good thing the whole world is in a panic (he says with tongue in cheek). Otherwise there would be no way to fund this amount of supply without immense pain. Instead, first we get the pain, and the US Treasury gets money for free.

The Fed added a record $90 billion in net liquidity via overnight repos in order to calm the market and grease the skids for the PDs to absorb this cascade of confetti headed their way. The PDs took the cash and put it to use in the stock market. New rules against short selling spooked the shorts into covering and the PDs were glad to put the squeeze on. Click here to download complete report in pdf format (Professional Edition Subscribers). Try the Professional Edition risk free for thirty days. If, within that time, you don’t find the information useful, I will give you a full refund. It’s that simple. Click here for more information.

This entry was posted on September 18, 2008 at 6:37 pm and is filed under Money and The Fed, Professional Edition. You can follow any responses to this entry through the RSS 2.0 feed.