Liquidity Trader – Macro Liquidity- Fed and Banking

Analysis of the major forces of macro liquidity that drive markets, including the Fed, foreign central banks, and the US and European banking systems. Resulting market strategy recommendations. Click here to subscribe. Now published at Lee Adler’s Liquidity Trader.

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Why Instability Is The New Normal

$321 Billion

That’s how much cash the Fed will pump into Primary Dealer accounts this week. Guess how much new Treasury issuance there will be over the same period. If you guessed $321 billion, you would be all but correct. It’s $328 billion.

That’s right. The Fed is buying all of the COVID19 rescue financing. It’s inventing imaginary money to pay Primary Dealers for that new supply. The Fed is printing the money to pay for the economic bailout.

And it’s not stabilizing the financial markets. Here’s why, and what it means

Fed Hyperinflates Its Balance Sheet But It’s Only A Holding Action

On March 3, the Fed converted Not QE into Panic QE. Since then it has pumped $766 billion in cash into Primary Dealer accounts. At the same time the US Treasury issued “only” $147 billion in new debt. So in essence, the Fed issued $619 billion in excess cash.

Other than the hyperinflationary implications, what good has it done? What does it mean for us looking ahead.

“I Am the Greatest!” Muhammad Ali Financial Crisis KOs the Fed

The Fed has undertaken so many rescue programs since Friday that my head is spinning. It’s hard to keep track of it all. A schedule of repo offerings for the next month reads like the Old Testament. Even the rabbis are arguing over it, the underlying question being, “Where is G-d already?” Follow the money.…

Fed Repeats the Mistake of 2008, Only Worse

With no prior announcement or clue, the Fed bought $37 billion in Treasury coupons from Primary Dealers on Friday. To pay for them it deposited $37 billion into dealer accounts at the Fed.

It was the largest single day POMO (Permanent Open Market Operation) purchase since the days of TARP and QE 1 in 2009.

It came without warning. I was so glued to the intraday live charts on Friday, I wasn’t even aware that the Fed had taken this emergency action until after the close.

We sure as hell saw the result. But this is only the beginning of this story.

The Smell of Death Everywhere But Dealers Smelling Like A Rose

Investors and leveraged speculators took the coronavirus panic straight to the bond market last week. Dealers, bless their little hearts, were long up the wazoo. Talk about smellin like a rose.

But somebody was short. Big somebodies. They’re dead. We don’t know where the bodies are buried yet, but the Fed will need to exhume them and fill the graves.

DANGER! M-FAT Stalled in February – Negative Divergence Formed

The market got way ahead of the amount of cash that the Fed was pumping into dealer accounts in February. That took a toll, and we’ve had a little “adjustment” over the past week. Here’s what comes next. Subscribers, click here to download the report Follow the money. Find the profits!Liquidity is money. Regardless of…

Here’s Proof that the Fed Is the Real Cause of the Crash

We knew that Not QE would fall well shy of Treasury issuance in February, and that that would be a problem for the markets. Subscribers, click here to download the report Follow the money. Find the profits!Liquidity is money. Regardless of where in the world that money originates, eventually it flows to and through Wall…