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Honey, There's A Dead Cat on the Porch - June 12, 2020


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Fed settled about $90 billion yesterday. 

The Fed has now promised QE infinity. But will it be enough, in the face of Federal deficit financing to infinity and beyond? Because for every dollar the Fed has promised to print and pump through Primary Dealer accounts into the financial markets, the US government has promised to issue about $3 in new debt.

$1 of financing for every $3 of new Federal debt is a whole new game of QE Lite that is unproven. Under earlier versions of QE, the Fed always printed QE dollar for dollar of Federal debt. The Fed monetized everything through its middlemen the Primary Dealers.

Under Pandemonium Panic QE, back in March and April, the Fed actually pumped in $2 for every dollar of new Federal debt issuance. That drove a meltup in stock prices. Which in turn triggered a rebirth of animal spirits and wild speculation in a bubble within a depression, the likes of which we’ve never seen.

So is this bubble sustainable when the Fed will only buy a third of the Mount Gargantua of new Federal debt issuance each month?

I’ll just say, Harrumph! I highly doubt it. I explain why, herein.

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2 hours ago, fxfox said:

I didn't meant to say that "Asia leads" or so, but that you see in Nikkei that it is obviously part of a global concerted action of the FED, ECB and BoJ. That goes so far that it seems that they really fine tune that on a daily basis: Nikkei goes up in the morning, S&P will go up in the morning too. I do not mean the ES, that is clear that they go in lockstep, no, I mean that the S&P replicates in its cash trading session the intraday development of the Nikkei from that ones cash trading session 12 hours earlier.

I think that could be a technical thing.  You watch what happens when one country has a holiday.  Say it's India: it will do what it would have normally done on that day once it opens again.  So people will say something like "hey why is India going down today when every other market rose?"  I disagree re global concerted action.  I'm a technician.  😛

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24 minutes ago, Jorma said:

You have a mistake on the top of page 4.  "it projected $2.68 billion in bill issuance for the whole second quarter"

 

 

Ouch! Thanks for catching that. 

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Should be trillion. I did it twice. 

Should read. 

How much more? The TBAC said that $84 billion in Treasury coupon paper (notes and bonds) will settle at the end of the month. It didn’t give details on short term paper issuance, but it projected $2.68 trillion in bill issuance for the whole second quarter. $2.25 trillion has already been issued or scheduled through June 16.

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sometimes the trees tell you much more than the forest.

Yesterday intraday:

MSFT new all time high of 195.76 finished at 186.27 on 53 MM shares down 5.37% on the day

AAPL new all time high of 351.06 finished at 335.90 on 51 MM shares down 4.80% on the day

TSLA new all time high of 1018.9 finished at 972.84 on 16 MM shares down 5.09% on the day

NVDA, PYPL, AMZN etc etc etc......

IT IS ALL OVER

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