DrStool Posted August 24, 2020 Author Report Share Posted August 24, 2020 19 minutes ago, potatohead said: It seems Macro investing is all the rage now. Countless Fintwitt and youtube stars parading dollar melt up, Fed balance sheet expansion does not create inflation (only commerical bank lending), Primary dealers are only reimbursed with reserves not cash when the Fed buys US treasuries from them (therefore not inflationary) , try to call out these people and the lower the dollar goes the more they become emboldened that the dollar is a rubber band being pulled back and waiting to rip higher. They're boobs. Link to comment Share on other sites More sharing options...
potatohead Posted August 24, 2020 Report Share Posted August 24, 2020 22 minutes ago, potatohead said: It seems Macro investing is all the rage now. Countless Fintwitt and youtube stars parading dollar melt up, Fed balance sheet expansion does not create inflation (only commerical bank lending), Primary dealers are only reimbursed with reserves not cash when the Fed buys US treasuries from them (therefore not inflationary) , try to call out these people and the lower the dollar goes the more they become emboldened that the dollar is a rubber band being pulled back and waiting to rip higher. There premise is that dollars are only born into existence when banks lend money to borrowers. Dollars only die when loans are paid off. Says nothing to the effect of defaults or forgiveness. Do not address that inflation is also influenced by confidence of the public's perception of purchasing power. Link to comment Share on other sites More sharing options...
DrStool Posted August 24, 2020 Author Report Share Posted August 24, 2020 But exactly what's their point? Investment wise, what's their point? The idea that Primary Dealers are only paid with reserves is peak idiocy. Primary dealers are paid with dollars that the Fed conjured out of thin air. The Fed deposits the money into their trading/cash accounts at the Fed. They become reserves when the dealers execute a subsequent trade or transfer the deposit to the parent bank or correspondent. Liquidity Link to comment Share on other sites More sharing options...
potatohead Posted August 24, 2020 Report Share Posted August 24, 2020 5 minutes ago, DrStool said: But exactly what's their point? Investment wise, what's their point? The idea that Primary Dealers are only paid with reserves is peak idiocy. Primary dealers are paid with dollars that the Fed conjured out of thin air. The Fed deposits the money into their trading/cash accounts at the Fed. They become reserves when the dealers execute a subsequent trade or transfer the deposit to the parent bank or correspondent. Liquidity That is what I believed as well. Many are trying to skip a step or two or convince others that the money the Fed creates out of thin air actually has nothing to do with inflation because it stays as reserves. When questioned on the dollar's weakness via "purchasing power" or money supply increases since the Fed has been created, they go silent. They continue to believe US Treasuries have long lasting value and continued deflation will keep this asset class in global demand. At the same time, they claim because the Federal Reserve does not purchase Treasuries or mortgages directly, the Fed has had little impact on price structure, money supply, and velocity. These people have garnered a mass of followers. Link to comment Share on other sites More sharing options...
DrStool Posted August 24, 2020 Author Report Share Posted August 24, 2020 The Fed uses the Primary Dealers as strawmen. No different from direct purchases. Money goes from the Fed to the dealers where it branches off. Some gets distributed to other traders, and some goes back to the Treasury, where it's spent into the economy. There's no CPI inflation because labor has no market power. But there's plenty of asset inflation, including housing, and commercial real estate, in particular, most of which is now worth a fraction of what it most recently sold for. The commercial RE market is frozen because no one will pay for empty office and retail buildings, or multifamily where 30% of tenants aren't paying rent. The real estate market is a shit show.. Link to comment Share on other sites More sharing options...
DrStool Posted August 24, 2020 Author Report Share Posted August 24, 2020 I should say little CPI inflation. There's some. Link to comment Share on other sites More sharing options...
DrStool Posted August 24, 2020 Author Report Share Posted August 24, 2020 5 day cycle projection now looks 3435. Link to comment Share on other sites More sharing options...
potatohead Posted August 24, 2020 Report Share Posted August 24, 2020 I would love to see Lee on Realvision or any podcasts discuss with "so called experts" who simply regurgitate other's work and really have little knowledge of the Central Banks' actions and its ramifications. Link to comment Share on other sites More sharing options...
DrStool Posted August 24, 2020 Author Report Share Posted August 24, 2020 This chart is from the report I just posted at Liquidity Trader. It's a chart of the Primary Dealer accounts at the Fed. Notice the spikes every month when the MBS settlements are held. This is a seperate line item from bank reserves. QE shows up in this account first. It then shows up in the reserves line item the following week when the dealers trader with counterparties or otherwise transfer the funds into commercial bank accounts, such as the account of their bank affiliate. Status Quo Antisellem 1 - LIQUIDITY TRADER AUGUST 24, 2020 The Fed’s balance sheet resumed its growth in August after a bit of a stall in July when dealers paid off Fed repos. That program has been at zero since then. Dealers don’t need to borrow from the Fed when the Fed is cashing them out every week with QE. And there’s the rub for bears. There’s still enough QE to keep this farce going, short term factors notwithstanding. Last week was MBS settlement week (see last week’s QE update). That pumped $100 billion into dealer accounts. Not all of that showed up on the Fed’s balance sheet total assets because other assets were paid down in the. MBS get paid off in the normal course of business during the month. Some of the Fed’s superfluous alphabet soup programs have also had reductions. But that stuff doesn’t really matter to the stock and bond markets. Our focus is on the Fed’s securities holdings, in what’s called the System Open Market Account (SOMA). That’s where the action shows up. It’s the money that the Fed pumps into the financial markets through its straw men, the Primary Dealers. And that is still steadily growing. Here’s what that means for the outlook and strategy. Subscribers, click here to download the report Not a subscriber yet? Get this report and access to all past and future reports risk free for 90 days! Link to comment Share on other sites More sharing options...
DrStool Posted August 24, 2020 Author Report Share Posted August 24, 2020 2-3 day cycle projection 3440. 5 day about the same Link to comment Share on other sites More sharing options...
PullMyFinger Posted August 24, 2020 Report Share Posted August 24, 2020 1 minute ago, DrStool said: 2-3 day cycle projection 3340. 5 day about the same Did you mean 3440? Link to comment Share on other sites More sharing options...
DrStool Posted August 24, 2020 Author Report Share Posted August 24, 2020 Yes Link to comment Share on other sites More sharing options...
PullMyFinger Posted August 24, 2020 Report Share Posted August 24, 2020 5 minutes ago, DrStool said: Yes Let's hope by later this week or maybe next the original post was accurate. 🙂 Link to comment Share on other sites More sharing options...
DrStool Posted August 24, 2020 Author Report Share Posted August 24, 2020 I don't think it's gonna happen. LOL Link to comment Share on other sites More sharing options...
DrStool Posted August 24, 2020 Author Report Share Posted August 24, 2020 Neither. Link to comment Share on other sites More sharing options...
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