Failure To Comprehend- Professional Edition Fed Report

The Treasury announced its auction schedule for next week and once again it will be dumping another humongous load of fresh supply on the market. The pressure on stocks and non government bonds is certain to continue as the Treasury crowding out continues week in and week out. The passage of the bailout bill, if it happens, will be a disaster, adding even more Treasury supply to a market which can’t cope with it. This is something that policy makers either fail to understand, or are ignoring. 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.

Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also provide analysis and charts for David Stockman's Contra Corner which I developed for Mr. Stockman. I’ve had a wide variety of finance related jobs in the past 44 years, including a stint on Wall Street in both analytical and sales capacities. Prior to starting the Wall Street Examiner I worked as a commercial real estate appraiser in Florida for 15 years. I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. My perspective is not of the Ivory Tower. It is from having my boots on the ground and in the trenches of the industries that I analyze and write about today. 

  2 comments for “Failure To Comprehend- Professional Edition Fed Report

  1. Stuart
    October 2, 2008 at 5:01 pm

    “As long as there is all this Treasury paper on the market with more on the way, there will be no market for
    anything else.”

    Excellent comment, but I wonder what choice does the Treasury have given its funding commitments….which are even going to balloon further.

  2. stevieo
    October 2, 2008 at 9:12 pm

    Swapping treasuries for bad paper IS the plan. They already put a ton of money in with the cash management bills and the central bank currency swaps. I see the bailout bill on the hill as a way to increase the money going into the plan, make it all legal permanent and on budget, and maybe they use up some of it to retire the temporary cash management bills.

    I think they’re protecting the MMFs from a run on the bank, because MMFs have become money equivalents. It’s the single largest systemic risk that they can do as a “work item”–something to do once–managements love tasks, and don’t know how to deal with anything that can’t be put in a specific time box, like changing behavior. Nevermind that we know it might end up being more like a DRIP and cost averaging and habitual.

    They can let individual companies fail, and maybe deal with them on an ad hoc basis. They can’t have a run on the banks–deposit, commercial, investment, or otherwise.

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