I see a lot of doom and gloom ppl post about how the FED is buying up the S&P and I wanted to understand exactly what the FED is buying and what she is lending against. The FEDs MO right now is prevent defaults. So they won't only lend to their Primary Lenders, but to Financial Institutions, Hedge Funds, Money Market Funds and Corporations directly. In this Statement right here: https://www.federalreserve.gov/news...3_YuOUwb_ve3tvy-HndQba0uk8csDiew-O60975vQHHIU The Federal Reserve Board gives the FED Permission to lend to Primary Lenders against "a broad range of Equities". As far as I know, the FED is lending against Bond ETFs as of right now. I haven't read anything being confirmed that the FED is lending against e.g. Amazon Stock. As far as I understand secondary lenders can only get Liquidity by putting up ABS, Treasuries and Bond ETFs: https://www.federalreserve.gov/monetarypolicy/smccf.htm Corporate Borrowers can go straight to the FED (if they are Investent Grade) and borrow funds: https://www.federalreserve.gov/monetarypolicy/pmccf.htm Furthermore the FED will buy Bonds and short Term Debt straight from the Exchange to keep Interest Rates low, by buying up the Bonds at a high price: https://www.federalreserve.gov/monetarypolicy/smccf.htm therefore helping Corporates indirectly managing financial risk. I have yet to find an article where it says the FED is lending against stock. Maybe the ppl who say the FED is buying the S&P over the past few weeks can point me to a statement or article
does it matter if it's indirectly? https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200317b1.pdf Eligible Collateral • Collateral eligible for pledge under the PDCF includes all collateral eligible for pledge in open market operations (OMO); 1 plus investment grade corporate debt securities, international agency securities, commercial paper, municipal securities, mortgage-backed securities, and asset-backed securities; 2 plus equity securities.3 Foreign currency-denominated securities are not eligible for pledge under the PDCF at this time. 3 The following equities would not be eligible: exchange traded funds (ETFs), unit investment trusts, mutual funds, rights and warrants.
Have you read anything about them buying Stock ETFs? Because from what I could gather so far it only applies to Bond ETFs (Investment Grade and Junk) as of now.
I also did not see any article. I did not read. Look for SP500 first it got over 2715 20% bear territory first of three indexes. Second it stroke from 2750 double deep support level. Yesterday it got up over 2800 and held. These are good signals for green next week or two unless something worse happened. I was buying from the deep 3/23. Good to buy good heavy oversold companies with cash. Some buying good stable dividend companies. I have a list but won’t give advise. My expectation will triple in few months.
Btw it was stated on business tv Chanel: institutions started to buy from the bottom, but they did not mention in particular what are they buying.
I take the fed at their word when saying "equity securities" are elegible to borrow against. At this point it's likely one of those things we come to find about "later" but has been pervasive all along.