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aussiebear

World Stock Markets Trading Discussion - Whispering wave

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All Ords 5-day chart

big.chart?nosettings=1&symb=AU:XAO&uf=0&

http://bigcharts.mar...com/default.asp

 

All Ords went sideways after the initial burst to finish +0.5%.  Sectors ranged from IT +1.5% down to Gold -3.9%.

Massive gains in Asia: China +1.8%, Hong Kong and Japan +2.6%, India currently +1%.

Big start in UK/Europe: FTSE +1.5%, DAX and CAC +1.3%.

 

 

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REPO EASING

The more i think about it the more I think the FED will conduct not QE 4 almost entirely through the repo market.

Why is the FED cutting Wall street in for part of the take??????????????.

After all the Fed could just buy treasuries directly  and cut Wall Street out.

But no......it is throwing money away providing the lowest cost funds to Wall Street which then buys the Treasuries and makes its cut.

Its subsidising Wall Street ....a Wall Street Employment Scheme.

Of course the Wall Street banks would rather own the Treasuries themselves rather than lend the funds to the Hedge Funds to buy them.

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TNX over 1.9.  LOL. Imagine a hand raised a fraction of an inch off the desk accompanied by a tiny flick of the little finger. All taken care of.

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6 hours ago, potatohead said:

nice article Lee,

https://www.zerohedge.com/markets/fed-has-absorbed-90-treasury-issuance-september

I thought there was some friction between you and Zerohedge. Glad to see they are posting your work.

Well, it's like this. I had no idea that they "borrowed" it.  But they left my promo intact so I'm not complaining. Anyone is welcome to repost my work provided they leave the promo intact.  

I had another guy complain that I plagiarized him. 

As if I even read anyone else's research. I told the guy that I hoped he was kidding, since I've been writing about this stuff for 19 years on WSE. 

https://wallstreetexaminer.com/2019/12/powell-spews-baby-poop-in-attempts-to-reassure-investors/

Meanwhile, because of the train strike in France, my ticket from Barcelona to Lyon was canceled. Instead of a 2 1/2 hour train ride, I ended up on a bus for 9 1/2 hours. Not fun.  But Lyon seems magnificent. 

 

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THE FED NOW RIDES A TANDEM BIKE

So the Fed wants to drive treasury rates even lower.

Making treasuries a terrible investment instead of just a bad one!!!!!!!!!!

But there is one big problem.

The Great Wall of Nil Bond Real Return.

If the FED drives rates significantly lower everyone will start to sell treasuries as they no longer work as an investment.

I.e. the real returns over the life of the Treasury are nil to negative. 

Even though they would still work as a speculation (so long as the FED continues Not QE)

Leaving the Feds Not QE only partially effective in funding the Federal deficit as it will be purchasing mostly existing treasuries and not new treasuries.

So it has to drive the Repo rate down as well as Treasury rates in tandem!!!!!!!!

Otherwise the Wall Street Banks and hedge funds with all those treasuries would have to dump them onto the FED.

As it would no longer be profitable to use the Repo market to fund their treasuries holdings.

So the margin between REPO rates and Treasury rates has to be maintained!!!!!!!!.

Thats the reason for the massive intervention in the repo market.

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