Jump to content

Thanks Windoze 8/12/22

Rate this topic


Recommended Posts

  • Replies 31
  • Created
  • Last Reply

Top Posters In This Topic

Top Posters In This Topic

1 hour ago, DrStool said:

What's crazy is that there's no cash coming out of the RRPs. This rally seems to be fueled by margin and bank repo. Even the bonds are firm today. Not much selling apparent. 

That means that retail buys with leverage. Retail outsmarts Hedgies since 2 weeks or so. Usually sign of a immanent top.

Retail will get their asses ripped off in Sep.

Link to comment
Share on other sites

OTOH:

We have the convincing weekly close above the 50 fibo.

In a bear market when the 50 fibo was broken there is no instance where then afterwards a new low was made.

So the June low is THE low and every downmove is to be bought from now on.

 

Link to comment
Share on other sites

Doc,

is it possible that the FED shrinks its balance sheet in Sep and at the same time uses the „Slush Fund“? I mean the Reverse Repos are on the liability side, so the answer should be „No, not possible“, but I have to admit that I don‘t know exactly how that „Slush Fund“ works.

Link to comment
Share on other sites

The Low was in (AAPL) it is higher than the chart shows.....           V for victory?

and that my friend is a JAM JOB w/ Buy Backs......et al.......NO QT to be seen.......

plenty of juice....ie liquidity....ie free money for some "them".......

1205792220_NoFeck.JPG.71acec00e61daa4bb9e9bc8048e27ffb.JPG

Link to comment
Share on other sites

9 hours ago, MisFit Kid said:

The Low was in (AAPL) it is higher than the chart shows.....           V for victory?

and that my friend is a JAM JOB w/ Buy Backs......et al.......NO QT to be seen.......

plenty of juice....ie liquidity....ie free money for some "them".......

1205792220_NoFeck.JPG.71acec00e61daa4bb9e9bc8048e27ffb.JPG

Well, my plan was to buy Apple at the EMA 50 monthly (currently at 113). That will, most likely, not materialize.

Apple is still a money machine and AWASH in liquidity. They can pump up their stock big time whenever they want. Since it has such a large percentage share in all kinds of indeces it helps to avoid a long lasting downmove like we had from 2000 to 2003.

To see Apple running out of liqui we would need a multi year long recession. Not impossible, but not very likely.

When we look at price action on friday it felt and looked like an automatic buy programme. Guess big part were buy backs from Big Tech.

Link to comment
Share on other sites

We have to realize that the 2000 to 2003 bear was the absolute exception, not the norm. It was much longer then the average bear.

Never ever will the current FED allow such a bear market. In 2018 they paniced and shit their trousers, in 2020 they didn‘t stop at the level before Covid drop. But BOMBED it much higher without ANY need, lately they should have raised at least 1.00 but they made 0.75 and so on and on…

Also they have to look that the USD doesn‘t get too strong, otherwise Emerging Markets will collapse. Argentina has already 70% inflation…

Link to comment
Share on other sites

16 hours ago, fxfox said:

Doc,

is it possible that the FED shrinks its balance sheet in Sep and at the same time uses the „Slush Fund“? I mean the Reverse Repos are on the liability side, so the answer should be „No, not possible“, but I have to admit that I don‘t know exactly how that „Slush Fund“ works.

It's essentially an overnight, interest paying, deposit account for money market funds, banks and dealers. They deposit the cash at the Fed overnight, and renew it daily as they wish. The Fed created it as a money market fund for money market funds that were getting stuffed with cash because the Treasury was taking away their T-bills and paying them back in return. The MMFs literally had too much money, earning no interest, with no place to put it. The Fed set up the RRP facility to bail them out by giving them a place to put that cash and paying them for that in the process. Another bullshit bailout for the financiers and big mahoffs who deposit excess cash in government MMFs. 

The idea that the Fed lends them securities in return as collateral is just a formalized joke.  The Fed doesn't need to give collateral.  

About 3/4 of this cash came from the paydowns of T-bills over the past 18 months. Most of that is MMF cash that has no place else to go and won't go anywhere else except into new T-bills. Because T-bill issuance has only just resumed, there may be some lag in the drawdowns of the RRP cash from the MMFs as the funds match their cash needs to available T-bill durations.  

The other 1/4 of the cash that flowed into the Fed's RRP account came from banks and dealers. That's about $500+ billion that might be used to buy longer term fixed income securities and stocks. So far, there's no sign of drawdowns of the RRPs, although they have stopped growing. So the inference is that the source of the cash for the rally in stocks is margin and bank repo, not this fund.

The data on dealer repo is available weekly with a 9 day lag but the Fed has made it so complicated to aggregate it that I gave up on it when they changed the methodology last year. I need to hire a programmer to get into the Fed's API and automate the process. Total bank repo and other and bank loans to non-banks is available weekly. I need to update those. 

 

Link to comment
Share on other sites

7 minutes ago, DrStool said:

Total bank repo and other and bank loans to non-banks is available weekly. I need to update those. 

 

I just checked. Nothing happening there. So I can't say what the source of funds for the rally is. 

I reported a couple of months back that the market was historically Dover Sole versus liquidity. So this could be a result of a hidden cash buildup, and short covering. 

Stocks Are Even More “Dover Sole” Versus Liquidity

Unfortunately, while I reported the condition, my analysis and conclusions about it were wrong. The rally has been much larger and more sustained than I expected. Had record profits on trading picks on the long side, but bailed too early, when the short term technical trading screens went to the sell side on balance. In retrospect, the failed sell signals have been a tell that this was something more than a garden variety bear market dead cat bounce.  

Link to comment
Share on other sites

10 hours ago, DrStool said:

I just checked. Nothing happening there. So I can't say what the source of funds for the rally is. 

I reported a couple of months back that the market was historically Dover Sole versus liquidity. So this could be a result of a hidden cash buildup, and short covering. 

Stocks Are Even More “Dover Sole” Versus Liquidity

Unfortunately, while I reported the condition, my analysis and conclusions about it were wrong. The rally has been much larger and more sustained than I expected. Had record profits on trading picks on the long side, but bailed too early, when the short term technical trading screens went to the sell side on balance. In retrospect, the failed sell signals have been a tell that this was something more than a garden variety bear market dead cat bounce.  

Lee, 

I start my question with a confession. I am both a Technical Trader and Liquidity Trader subscriber. I read TT voraciously the minute I become aware it is out. With LT, I am not as faithful of a reader--I think it is a great product and someday hope to understand it better, but for now I sometimes struggle to intuit the stuff. 

Because I don't read LT as closely as I should, I don't know how or how much you track international capital flows. Maybe it's in there plain to see and I don't get it.

But here is my question: is it possible that this rally has been fueled in significant part by international capital flows into the U.S. stock market? Could it be "smart" money getting out of Europe ahead of civil unrest and war that is likely to spread further as early as next year? And also capital moving out of China given the bank and real estate debacles that are happening? 

Link to comment
Share on other sites

10 hours ago, DrStool said:

It's essentially an overnight, interest paying, deposit account for money market funds, banks and dealers. They deposit the cash at the Fed overnight, and renew it daily as they wish. The Fed created it as a money market fund for money market funds that were getting stuffed with cash because the Treasury was taking away their T-bills and paying them back in return. The MMFs literally had too much money, earning no interest, with no place to put it. The Fed set up the RRP facility to bail them out by giving them a place to put that cash and paying them for that in the process. Another bullshit bailout for the financiers and big mahoffs who deposit excess cash in government MMFs. 

The idea that the Fed lends them securities in return as collateral is just a formalized joke.  The Fed doesn't need to give collateral.  

About 3/4 of this cash came from the paydowns of T-bills over the past 18 months. Most of that is MMF cash that has no place else to go and won't go anywhere else except into new T-bills. Because T-bill issuance has only just resumed, there may be some lag in the drawdowns of the RRP cash from the MMFs as the funds match their cash needs to available T-bill durations.  

The other 1/4 of the cash that flowed into the Fed's RRP account came from banks and dealers. That's about $500+ billion that might be used to buy longer term fixed income securities and stocks. So far, there's no sign of drawdowns of the RRPs, although they have stopped growing. So the inference is that the source of the cash for the rally in stocks is margin and bank repo, not this fund.

The data on dealer repo is available weekly with a 9 day lag but the Fed has made it so complicated to aggregate it that I gave up on it when they changed the methodology last year. I need to hire a programmer to get into the Fed's API and automate the process. Total bank repo and other and bank loans to non-banks is available weekly. I need to update those. 

 

Thank you very much for that long answer Doc, much appreciated 🙂

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
 Share

  • Tell a friend

    Love Stool Pigeons Wire Message Board? Tell a friend!
  • Recently Browsing   0 members

    • No registered users viewing this page.
  • ×
    • Create New...