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On Today's Program- Mahler's Funeral March 3/13/20

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UK coronavirus crisis 'to last until spring 2021 and could see 7.9m hospitalised'

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FED LOWERS DISCOUNT RATE 1.50-PT TO 0.25%

FEDERAL RESERVE CHANGES FED FUNDS RANGE TO 0.00% TO 0.25%

FED WILL PURCHASE $500 BILLION IN TREASURY SECURITIES

 

 FED WILL PURCHASE $200 BILLION IN MORTGAGE-BACKED SECURITIES

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THe market doesn't need more cash. Interest rates falling to zero of their own accord is proof enough of that. The market needs rationality. And the only way to get there is massive repricing, deleveraging, and a return to the good old time religion of rewarding thrift and hard work. There's nothing that the Fed can fix by just continuing to exacerbate the fundamental problem at an even greater and greater rate. We've gone exponentially parabolic, stalled, and now must come back to earth. 

This will be cured by Depression, death, famine, and pestilence.  

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If this injection now evaporates then the shit will hit the fan in absolutely epic proportions.

Go and look at Nasdaq100 stocks. Many of them didn‘t even start to really crack yet. There is sooo much room to fall, H O L Y crappola crappy crap!

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Effective March 16, 2020, the Federal Open Market Committee (FOMC) directed the Open Market Trading Desk (the Desk) to increase over coming months the System Open Market Account (SOMA) holdings of Treasury securities and agency mortgage-backed securities (MBS) by at least $500 billion and at least $200 billion, respectively.  The FOMC instructed the Desk to conduct these purchases at a pace appropriate to support the smooth functioning of markets for Treasury securities and agency MBS. The FOMC also directed the Desk to continue rolling over at auction all principal payments from Treasury securities holdings and to reinvest all principal payments from agency debt and agency MBS holdings in agency MBS.  These plans replace the Desk’s previously communicated plans for reserve management and reinvestment purchases.  In addition, the FOMC directed the Desk to continue conducting term and overnight repurchase (repo) agreement operations to ensure that the supply of reserves remains ample and to support the smooth functioning of short-term U.S. dollar funding markets.

Treasury purchases will be conducted across a range of maturities and security types to support smooth market functioning, with the intention that purchases will eventually be conducted roughly in line with the composition of Treasury securities outstanding.  The Desk will begin purchases on Monday, March 16, 2020 with $40 billion in purchases of nominal coupon securities and Treasury Inflation-Protected Securities (TIPS).  Consistent with the directive, the pace of purchases will be adjusted as appropriate to support the smooth functioning of the Treasury market.  Separately, the Desk will continue to roll over at auction all principal payments from the Federal Reserve’s holdings of maturing Treasury securities.

Agency MBS purchases will generally be concentrated in recently produced coupons in 30-year and 15-year fixed rate agency MBS in the To-Be-Announced (TBA) market.  The Desk will begin purchases on Monday, March 16, 2020.  For the monthly period that runs through April 13, 2020, the Desk expects to purchase around $80 billion in agency MBS, which will include $23 billion in purchases to reinvest principal payments from agency debt and agency MBS expected in the month of March.  Consistent with the directive, the pace of purchases will be adjusted as appropriate to support the smooth functioning of the agency MBS market. 

Repo operations will continue to be offered for at least $175 billion in overnight repo each day, at least $45 billion in two-week term repo twice per week, and $500 billion in one-month term repo and $500 billion in three-month term repo each week. 

Detailed information on these Desk’s operations can be found on the following pages:

Treasury Securities »
Agency Mortgage-Backed Securities »
Repurchase and Reverse Repurchase Agreements »

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If the S&P hits 3000 next week I declare the Western Society as officially braindead.

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S&P500 continued dropping in the 2001 and 2007 recessions

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OK. There's less here than meets the eye. The only thing that is definitively new is the MBS purchases. 

 

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How do they get the USD in the “hands” of the players that need them?  How do the foreign businesses, banksThat are not producing or selling because of lack of demand get these dollars?

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3 minutes ago, itiswhatitis said:

How do they get the USD in the “hands” of the players that need them?  

Traditionally, brown paper bags and non sequential bills.

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QE1 was 104 bln usd monthly (1.25 TN via 1 year)

QE2 was 125 bln usd mth (1 TN via 8 months)

QE3 was 40 bln usd monthly without time limits

 

Now is #QE4 with 700 bln usd for couple months and 80 bln during just last two days + big repos

Biggest QE ever.

We are All Japanese now! 

 

PS. Doc, correct my numbers please. 

 

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Dow down 900. Gold gaps up $30. 

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