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Load Up the Right Side To Unleash Swing Power 5/24/21

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Lest we forget that a 50 point S&P move is now only 1.24%. It's large, but not big. 

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Interesting comment from Christpher Whalen, He seems to think RRPs are tapering :

"So it should be clear to everyone that tapering began last week with the $351 billion in Reverse RPs by the #FOMC. The sheep are nervous in Washington. Buckle up kiddies. Powell et al are flying blind on #inflation. "

 

Unless this RRPs are made more permanent, I agree with you that this is just another account to park excess cash into. Since T-Bills are becoming less available.

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The idea that RRPs represent tapering is not right. If it were not for the Treasury paydowns, Fed would have zero RRP. In fact, it was zero until the Treasury started the paydowns. Consistently zero. And it will go back to zero when the paydowns stop, and the Treasury starts reissuing bills. This is a given. We even know when. 

https://wallstreetexaminer.com/2021/05/about-the-reverse-repo-rrp-crisis/

It's not just that T-bills are becoming less available. The Treasury has removed almost $600 billion in bills from the market since Feb 23. And it continues at a pace of 40-45 billion a week. The flip side of that is that the holders of the bills get their cash back. So dealers, banks and MMFs have $600 billion in cash which they can't roll over as usual, because there are no bills to roll into. So they put it into the Fed's overnight RRP account. 

The whole thing is simply the technical result of the budget law requiring the Treasury to reduce its cash to $133 billion by August. It had been holding $1.6 trillion. 

So this cash is flooding into the market propping everything up for the time being. But a bloodbath is coming. 

https://liquiditytrader.com/index.php/2021/05/23/banking-system-fragile-as-fuse-for-implosion-nears-ignition/

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The problem out therein Punditland is that none of them took damn Accounting 101 or if they did, they weren't paying attention. Economists are losers and dolts because they can't, or won't, do the simplest accounting. Double fucking entry bookkeeping is not rocket science. It's all about the debits and credits. There's nothing mysterious whatsoever about the money flooding into RRPs. And there's no esoteric meaning to it. 

God bless the CPAs, unless they help businesses cheat. Then they should go to prison. 

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Capitalstool - Building a darker and smellier tomorrow for a better world today. 

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I am really tired of dealing with the pundits on Twitter. I really am. I use it for promo cuz I gotta eat, but that's it.

All the shit out there just irritates me and I don't need it. I just want to do my work and publish it for people who are interested. That's it.

I really don't care what other anal cysts think. I really have no desire to argue with them, or even hear their opinions. I'm even getting near the point where I just don't want to republish other people's work, even those I agree with most of the time. 

I just want to do the research, analyze the data, connect the dots, and try to publish it in a coherent form. That's all. I enjoy it. I want to help my subscribers. I want them to feel that I'm adding something worthwhile to their process. 

Let other pundits do their thing. I'll do mine. I do the analysis of the raw data, and my conclusions are either right or wrong. The chips will fall where they fall. I like when my analysis is proven right, and when it's not, I just work harder to figure out why, so I can use that knowledge next time it's relevant.

Most of all, I really appreciate the people who read my stuff and actually pay me for it. It's my pleasure to serve you! 

 

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I've engaged with a few of them over the years, and it just doesn't work. They eventually get on my nerves, and I certainly get on theirs. I can't stand academics in particular, except for Dr. Gurdgiev, who is fantastic. And the one pundit whose work I always enjoy is Doug Noland of course. He is an inspiration, even if the next collapse is always right around the corner. 

But I'm always happy to answer your questions! I'm happy to expound on my work.  

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Always appreciate your comments and replies. I was hoping to get others to see the primary dealer, Fed, and liquidity analysis from your angle. It very effective and easy to understand. I am sick of the so called experts, "bond kings"  and others for pointless commentary. Many of these people are put on a pedestal for reasons I can not understand. Many confuse others which in the world of Fintwit ends up like watching a bunch of Zombies walking around in a circle.

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