US Fed to Print $425B for New Year’s — 3 Times Bitcoin’s Market Cap

Discussion in 'Wall St. News' started by guru, Dec 14, 2019.

  1. tiddlywinks

    tiddlywinks

    Seems most here don't "remember" or don't even know what "repo" is.

    It is OVERNIGHT borrowing!!

    EOY will be accommodation for banks, hedge funds, and similar, to ensure no rise in short-term interest rates. In layman's terms, EOY window dressing for the borrowers, to be unwound within hours or days at max.

    Not to diminish the entire elevated repo thing, there IS a confidence problem where banks do not want to lend to other banks, even just for overnight... There IS "something" going on in the kitchen. One *guess* has to do with affects of BRExit.
     
    #11     Dec 14, 2019
    damon_achey likes this.
  2. bone

    bone

    To be more detailed - the Banks borrowing on Repo Agreement have to post very specific ultra high quality in kind collateral to the Fed for the privilege - mostly US Treasuries and certain debt-to-equity ratio MBS’s.

    As I’ve said elsewhere - this liquidity “crisis” is largely of the Fed’s own making. They’ve been buying Treasuries on the open market like drunken sailors.

     
    #12     Dec 14, 2019
    trader99 likes this.
  3. Did none of you guys read the same thing I did between the lines on Powell's press recent press conference. A big bank withdrew liquidity because of reserve requirements which they want lowered. This is the "banks don't want to lend to other banks" bit. Approximately 1/3 of overnight repo was removed by JPM.

    I agree with bone, when I think he says that there is no problem here. This is "too big to fail" being a bully.
     
    #13     Dec 14, 2019
    bone likes this.
  4. #14     Dec 14, 2019
    guru and bone like this.
  5. SteveM

    SteveM

    Gold-backed currency may seem like madness to you, but this seems like madness to me: Debt.JPG
     
    #15     Dec 14, 2019
    Spooz Top 2 and Seaweed like this.
  6. tiddlywinks

    tiddlywinks


    You can mark the calendar and place me in the opposite camp.
    There indeed is a problem...

    Fed vs JPM is a deflection.... neither the Fed or JPM can speak honestly without causing significant stress to the entire system.

    In time, we will see . I hope I'm wrong.
     
    #16     Dec 14, 2019
    Spooz Top 2 and Seaweed like this.
  7. bone

    bone

    I used to trade the Treasury Basis - so I had to use the Repo market through my FCM.

    A Repo Agreement is an in-kind exchange with the Fed - it is NOT an IOU.

    If I want $2B face value 48 hour Repo agreement at 1.91% I have to post $2B face value of a US Sovereign Instrument - typically a T-Bill or T-Note, as collateral. There is NO LEVERAGE in the Fed / Inter-Bank Repo Market.

    As a Bank, I do not want to liquidate performing commercial and retail loans just for the sake of meeting very short term operational liquidity needs - hence the Repo Market.

    As a basis trader, I will buy a T-Note on the secondary market and finance the purchase on the Repo market using the T-Note as 1:1 collateral. I will sell the notional value of the cash Note on the analog futures market. That particular spread is called being LONG the basis.
     
    Last edited: Dec 14, 2019
    #17     Dec 14, 2019
    trader99 likes this.
  8. bone

    bone

    That’s small time - look at Japan, Steve-O :cool:

     
    #18     Dec 14, 2019
  9. tiddlywinks

    tiddlywinks


    To me, that pretty explains why JPMs recent public comments and criticisms of Basel III (right or wrong) are merely red-herrings.
     
    #19     Dec 14, 2019
  10. dozu888

    dozu888

    you have been brain washed by bitcoin and gold bullion salesmen.

    the dollar is backed by the full strength of the US economy and military... now would you trust that? or some piece of metal, or some string of numbers out of thin air?

    sure when you print you dilute money, so what, as long as you are invested in assets that naturally hedge the printing... yup, people don't have assets get screwed, but we already know that.

    central banks are the greatest thing since sliced bread... otherwise how'd we have survived '08? you can't move quickly with gold bars or bitcoin to put enough lubricant in the economy to prevent from seizing.

    it sounds cool to yell 'abolish the Fed'... but be careful... at least with the Fed you have food on the supermarket shelves.
     
    #20     Dec 14, 2019
    AKUMATOTENSHI, trader99 and bone like this.