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Fed's New Rescue Program Just Like the Old Program - 3/13/23

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But who are they hedged with???

The losses do not go away!!!!!!

They still have to be eaten by someone.

They are very large ...too large

What if they default on the hedges.

What if the banks have merely hedged each other in a circular firing squad.

AIG would have defaulted on its CDS if the government had not backstoped them to the tune of $120 billion. 

A similar scenario will play out for the intertest rate hedges.


The problem remains.

The Government will have to backstop the swaps.

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They should have never let signature and SVB go.

The system is just too fragile.

Now the Eccles Eclesiarch has to come out with the "Whatever it takes statement"

The sooner the better.

Its a complete and total mess,

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6 minutes ago, potatohead said:

No one is talking about the velocity of money and it may finally start to rise.....

Right. V is the ratio of GDP to M. If M shrinks and GDP is positive, then V goes up. A lot. 


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6 minutes ago, SiP said:

SVB is just tech bank. Its not mom and pop, not RE.

Bank runs are contagious. And in the era of online banking and social media, instantaneous. There are no dominoes. Just a nuclear explosion. 


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10 minutes ago, potatohead said:



Although buying T-bills only shrinks M if the US Govt doesn't spend the proceeds and allows Treasury Cash to build up.

Meanwhile, if the Fed stops QT and begins printing again, then V will start down again. I have to think about increased Discount Window borrowing will impact M. It depends on what happens to those deposits. They would only leave the system if they are used to pay down debt. 

Very messy here. Hard to reach firm conclusions. We have to watch the markets. 

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For the week ended March 10, there were 3 charts with multiple buy signals as of Thursday or Friday. There were 482 multiple sells. It’s like the night that Wilt scored 100 points. It only happened once.

The prior week there were 33 buys and 37 sells. The week before that, the tally was 11 buys and 113 sells. That was a big number on the sell side, suggesting a change of trend in the market. But the setups didn’t look great for entering shorts there.  Or so I thought at the time.

That was the week to get short. I missed it. I compounded the mistake by choosing 3 longs last week. Needless to say, they did not do well, as tracked from the March 6 closing price. I will close them out as of today’s closing price. The list ended the week with a loss of 0.6% on an average 12 calendar day holding period.

I cannot visually review 482 charts. I am looking at as many as possible. As I look at these, the question I have is whether it is too late to go short and do we have the stomach for what are likely to be extreme moves in both directions.

We’ve been in a trading range. Trading ranges are meat grinders. Trends with 3% price moves a day are meat cleavers.  Right now we have a little of both. Furthermore, there’s just too much noise. Support levels are being challenged and broken, but I have no sense that these breaks will stick. There’s too much mindless intervention, and knee jerk reaction, to have any confidence here.

That said, as I went through more than 100 charts in alphabetical order, there were a few that were  ordinary, even stodgy looking, bearish setups. I am adding these to the list to short. I will start tracking these as of today’s (March 13) closing price.

The next buy round of buy signals should be scalpable. I will be on the lookout for those. I’d like to see a nice bounce that can be shorted. But the next round of good sell signals will be a cycle away. And the current round has come too late for my liking. That said, I’ll take my chances with the 4 that I’ve selected for now.

Table and charts below (subscriber version).  Non-subscribers click here for access.

Technical Trader subscribers click here to download the complete report.

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24 minutes ago, potatohead said:



This new program will be know as the SHort-Term notes offering or SH-T for short

Eggs sell ent! 

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