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Fasten Your Seatbelts While We Wait for the Fed Rescue 3/17/21


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4 minutes ago, potatohead said:

Lee, what is take on the SLR (Supplementary leverage ratio)? Banks want to turn away deposits?

I don't think it has much relevance to the markets. Banks overall have enough capital to be well above the required ratios. Treasuries are a small percentage of their total assets. Yeah, its shrinking, but they still have plenty. 

The problem isn't the banks as much as it is the dealers. Which ones are in the most trouble in terms of concentration of risk in heavy bond holdings, I don't know. 

I think the ones who have a concentration of their business in fixed income securities are in the deepest shit. I really believe that most of them are completely busted and just acting as fronts for the Fed. That's a game that can only be played for so long. As prices drop, collateral damage spreads. 

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