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I’ve been pounding away at the idea that the fix was in, the deck was stacked, and the dice were loaded for the past couple of weeks, as the Fed was set to pour more than $130 billion in cash into the market over a little more than a week between September 12 and September 19. It was perfectly timed to coincide with the FOMC announcement. I was convinced that no matter what the Fed did, the market was set up to rally. And that’s the way it was.
Was I surprised that the Fed did not taper? Sure. But the real shame on me was that I thought the consensus was right, that the Fed would do a small cut to get the ball rolling. Now, since when have I ever thought the consensus was right? Really, consensus is the enemy. It’s the haven of the uncritical, unthinking, sheeplike masses who roam Wall Street and the financial media. I won’t go so far as to call the media people “journalists.” There are very, very few journalists any more. They’re mostly wholly owned shills for the State and the Plutocratic order. So when they reach a consensus, I’m usually the first to scoff.
The tipoff should have been Lloyd the Liar Blankfiend telling one and all that he expected a $10 billion Taper. Surveys of Primary Dealers reflected similar sentiments. But all the while the dealers had been loading up on longer Treasuries and the charts suggested that Treasuries were primed for a rally. I don’t know what came over me if I thought the dealers were telling the truth. Their actions in accumulating Treasuries AND heavily accumulating Treasury futures, suggested that they knew that there would still be plenty of money coming from the Fed for the foreseeable future.
See, the Fed’s traders talk to the Primary Dealer traders every day all day long. Yes, the dealers get it wrong a lot, and they have been so wrong at major turning points that they’ve nearly destroyed the world, but there was a reason they were buying in recent weeks, and today we found out what it was. The trick is to know when they’re going to be right and when they’re going to be wrong. I haven’t figured that one out yet, but one thing that still works is that money talks, and printed money talks really loud, so I had pretty strong conviction that the Fed and Treasury had set things up really well for a rally in the wake of the FOMC.
Does it matter that I was wrong that the Fed would taper? Yes and no. Yes it’s bad to be wrong but no because as I wrote in Tuesday night’s market update, that wasn’t the question. The question, as always, is WHAT WILL THE MARKET DO? That question is independent of all the talk and speculation in the media and social networks. That stuff is just a sideshow.
When these guys, the Goldmans and the JPM people etc, come on TV, they are lying out their asses to enhance their trading positions. The journalists, who are clueless, and sometimes downright dishonest, are just regurgitating what every one else is saying. It’s an echo chamber, nothing more. When the Street talking heads come on TV, they’re not giving you advice. They’re not giving you their honest opinion. They are marketing. They are telling you what they think will best enhance their inventory positions. That’s all. Talk is less than cheap. It is worthless. It is misleading. It is a smokescreen designed to get you to always do the wrong thing.
And today we found out, yet again, that it is indeed the money that talks.
Table of Contents
Macroliquidity Component Indicators
Fed Cash to Primary Dealers
Foreign central bank purchases
US commercial bank deposit flows
Bank Treasury purchases
Bank Trading Accounts
Bank reserve deposits
Treasury Auctions, Federal Revenues and Supply Impact, and Treasury Yields
Open Market Operations (OMO) and Monetary Policy Actions
Other Policy Tools and Total Fed Credit
Other Fed Balance Sheet Items – Liabilities
Bank Loans Outstanding
Foreign Central Banks
Fannie and Freddie
Money Supply and Fund Flows
Bank Holdings of Treasuries
Bank Capital Trend
Click here to download complete report in pdf format (Professional Edition Subscribers) including 36 pages of charts and clear, cutting edge analysis that you can use to gain an edge in the market. 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. 30 day risk free trial for new subscribers. Click here for more information.
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