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Fed Real Reaction Day 9/23/21

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What happened to the $20 billion they were talking about yesterday?

Any amount will be too much. But they have a slush fund that will hide it for awhile. 

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3 minutes ago, BurntOnce said:

a 12 billion reduction per month of tapering is nothing. that's what they say on gloomberg.

man cannot be defeated.

The most important metric is the percentage of the monthly deficit vs total Fed  asset purchases. Those being Treasuries and MBS.

It looks likely that no matter what comes out of congress it isn't going to mean much additional spending for many many months.  So the muddle through scenario is looking good in that way.

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Just now, Jorma said:

The most important metric is the percentage of the monthly deficit vs total Fed  asset purchases. Those being Treasuries and MBS.

It looks likely that no matter what comes out of congress it isn't going to mean much additional spending for many many months.  So the muddle through scenario is looking good in that way.

It will work for a while.  

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this will end in tears...they just have to figure out who or what to pin it on...if anyone doesn't believe that Janet, Jerry and Joe don't have a plan...you should think again... it may not work but they will try something...my bet is an extraneous event, false flag?,  China,  who knows...but the event will crash the Market, they will say, and money will pour into bonds as safe haven.....unlike my Namesake I am almost always wrong and over simplified.

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Just realized the Fed's RRP slush fund is the money market funds' institutional money market fund. 

The smart money "Cash on the sidelines," baby! 

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27 minutes ago, No Einstein said:

this will end in tears...they just have to figure out who or what to pin it on...if anyone doesn't believe that Janet, Jerry and Joe don't have a plan...you should think again... it may not work but they will try something...my bet is an extraneous event, false flag?,  China,  who knows...but the event will crash the Market, they will say, and money will pour into bonds as safe haven.....unlike my Namesake I am almost always wrong and over simplified.

But the thing is, you don't have to think. Just follow the money. Read and react. 

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10 minutes ago, DrStool said:

Just realized the Fed's RRP slush fund is the money market funds' institutional money market fund. 

The smart money "Cash on the sidelines," baby! 

I didn't appreciate or understand how building up the Treasuries balance to $1.9TN, and then mandating that it be reduced 90%, was a strategy.  A way to liquify the system and obviously the RRP's were a part of the model. I think if anyone ever looked, that it was the Treasury and the Fed who got that Treasury account slashing by the end of the year into the law.

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SPX did close the gap Market need to follow through today with another huge green Candle Or it's another fake out and run out of Rocket fuel, Bearmarket rallies are nasty like we had Nothing has changed. Government will run out of $$ next month, Can they raise debt ceiling?

Can Fed do taper while there is that Debt ceiling?

That is why, Once Debt ceiling is raised there will be taper in November.

 

 

24 sep morning fake out.png

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1. Markets tend to return to the mean over time.

Translation: Trends that get overextended in one direction or another return to their long-term average. Even during a strong uptrend or strong downtrend, prices often move back (revert) to a long-term moving average. The chart below shows the S&P 500 over a 15-year period with a 52-week exponential moving average. The blue arrows show several reversions back to this moving average in both uptrends and downtrends. The indicator window shows the Percent Price Oscillator (1,52,1) reverting back to the zero line.

Chart 1  -  Bob Farrell 10 Rules

2. Excesses in one direction will lead to an opposite excess in the other direction.

Translation: Markets that overshoot on the upside will also overshoot on the downside, kind of like a pendulum. The further it swings to one side, the further it rebounds to the other side. The chart below shows the Nasdaq bubble in 1999 and the Percent Price Oscillator (52,1,1) moving above 40%. This means the Nasdaq was over 40% above its 52-week moving average and way overextended. This excess gave way to a similar excess when the Nasdaq plunged in 2000-2001 and the Percent Price Oscillator moved below -40%.

Chart 2  -  Bob Farrell 10 Rules

3. There are no new eras – excesses are never permanent.

 

 

https://school.stockcharts.com/doku.php?id=overview:bob_farrell_10_rules

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