The Fed is really tightening the screws on Primary Dealers this week. So far, stock futures traders are laughing and farting in the bears’ general direction.
The Fed has spent a couple gazillion over the past two weeks and the stock and bond markets have only been flat. Is that a good thing? I doubt it. Looking ahead, the Fed won’t be pumping enough to keep the dealers afloat.
It may be. Here’s what to look for, and a few mining stocks to ride along the way.
Fed QE $1.802B TIPSPurchase 2020-04-27 NYFed treasury securities operations
Fed QE $5.000B CouponPurchase 2020-04-27 NYFed treasury securities operations
Evidence is increasing that we will not see the March low materially exceeded in nominal terms. This may have little meaning in terms of the future purchasing power of a dollar, but at least nominally the worst seems over. The Fed has won this round and is, for now, again in control of the stock market.
New bull market? No. Unproven. New lows to come or a retest? No. Unproven. Markets are engaged in a key battle between the worst evolving fundamental picture in our lifetimes on the […]
Ever resolute, the Fed kept pumping the cash into Primary Dealer accounts. It kept at it until, as I calculated elsewhere, it had pumped in about $800 billion more than the dealers, and indeed the entire world, needed to absorb the flood of Treasury supply that was hammering it. That happened by the middle of April.
It was enough for the dealers to get back to their fun business of acquiring inventories of stocks, marking them up, triggering short squeezes, and convincing their herds of institutional sheep customers to follow the shorts and dive back into the market with whatever cash they had raised on the way down.
It worked, as we all know. Stocks have recovered around 55% of what they lost in the crash.
But the Fed has started to do the tighten up. Here’s what you need to know.
Now on a weekly basis, we’re witnessing things that couldn’t happen – actually happen.
You should be seriously unnerved by the slow decline in LIBOR.