Posts Tagged ‘Federal Reserve Bank Of New York’

Draining the Swamp: The Fed’s Tri Party Repo Machine

Draining the Swamp: The Fed’s Tri Party Repo Machine

Courtesy of  Jesse’s Café Américain

In this case as outlined by the New York Fed memo below, a triparty repo transaction is a transaction among three parties: a cash lender acting on behalf of all holders of dollars (the Fed), a borrower that will provide collateral (dodgy debt holder in shaky financial condition), and a clearing bank, most likely a primary dealer like J.P. Morgan, which is only too happy to collect its fees as an agent of the Fed.

The triparty clearing bank provides custody (agency) accounts for parties to the repo deal and collateral management services. These services include ensuring that pledged collateral meets the cash lenders’ requirements, pricing collateral, ensuring collateral sufficiency, and moving cash and collateral between the parties’ accounts. What if any liabilities the clearing bank such as J.P.Morgan or Goldman Sachs might obtain for the mispricing of risk remain undisclosed, but are probably negligible at worst.

This is the method of obtaining toxic assets from the books of non-primary dealers, and providing stability and liquidity from the aggregate value of all dollar holders to cover the misdeeds of diverse financial institutions and other favored parties.

In other words, the Fed is draining the financial debt swamp and toxic waste dumps into your basement, if you hold Federal Reserve Notes. Your IRA’s, your 401k’s, your savings, as long as you hold Federal Reserve Notes, which are claims on their balance sheet loosely backed by the Treasury. When the Fed’s balance sheet contained nothing but Treasuries and explicity backed agencies that relationship was firmer. Now, we are into the realm of make believe and Timmy’s credibility.

The Fed pledges that Goldman and Morgan assure them that there will be no radioactive material in the sludge pond headed your way, and levels of carcinogenic and toxic contamination will be within levels that they believe are adequate based on the non-binding estimates.

In practice the Fed has a defaults account on its book for the shortfalls from fat valuations due to the toxic debt it has already assumed on your behalf.

The source and composition of the sludge will remain a secret among the bankers, without oversight. This seems like taxation without representation, at least for holders of dollars that are US citizens, since the Fed is engaging in the expenditure of public money…
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Geithner Singled Out In TARP Watchdog Neil Barofsky’s Scathing Report On AIG Bailout

The Huffington Post has a couple articles on the highly critical SIGTARP report discussed previously by The Epicurean Dealmaker. - Ilene

Geithner Singled Out In TARP Watchdog Neil Barofsky’s Scathing Report On AIG Bailout

scathingA brutal report issued Monday by a government watchdog holds Timothy Geithner — then the head of the Federal Reserve Bank of New York and now the nation’s Treasury Secretary — responsible for overpayments that put billions of extra tax dollars in the coffers of major Wall Street firms, most notably Goldman Sachs.

The authoritative new narrative describes how, while bailing out insurance giant AIG last fall, a team led by Geithner failed nearly every step of the way.

Instead of bargaining with AIG’s numerous counterparties to resolve its billions of dollars in souring derivatives contracts, Geithner’s team ended up paying top dollar for toxic assets — "an amount far above their market value at the time," the report notes.

"There is no question that the effect of FRBNY’s decisions — indeed, the very design of the federal assistance to AIG — was that tens of billions of dollars of Government money was funneled inexorably and directly to AIG’s counterparties," the Office of the Special Inspector General for the Troubled Asset Relief Program said.

Wall Street firms like Goldman Sachs, Merrill Lynch and Wachovia got full value for their derivatives contracts with AIG, and taxpayers got the bill. In total, $27.1 billion of public money was transferred to companies that did business with AIG…

Read more here.

Goldman Sachs Would Have Been Damaged By AIG Failure: SIGTARP Report

As Goldman Sachs put it in a press release last March, the bank had "no material direct economic exposure" to AIG.

Well, it depends on what you mean by "material direct economic exposure."

In a report issued earlier this week, TARP special inspector general Neil Barofsky took a shot at Goldman’s claim that it was insulated against AIG’s demise. While, the report’s language is arcane, the message is simple: if AIG had gone under, Goldman Sachs would have had significant difficulty trying to collect on the the derivatives bets it placed with other banks in order to offset potential AIG losses.

Full article here.

 


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Zero Hedge

Brexit Day Arrives: Why One Trader Thinks It Will Lead To A "Hefty Rally" In Sterling

Courtesy of ZeroHedge. View original post here.

With Theresa May's signed Brexit exit letter due to be delivered in just over an hour to Europe, "severe risks to the U.K. economy litter the path ahead" but as Bloomberg's Mark Cudmore writes overnight "this isn’t the time to trade on them." Instead the former FX traders lookat flows, and specifically the record speculative sterling shorts, and notes that "at some point, these positions have to be unwound" adding that "after Brexit is officially triggered, there are no other concrete dates on the horizon for bad news, so many shorts will be closed." ...



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ValueWalk

Understanding the Debate Over Math Standards

By insidesources. Originally published at ValueWalk.

Math standards and Common core

Equity versus excellence, conceptual understanding versus procedural expertise, and classroom experience versus ivory-tower pedigree. When it comes to math instruction, opposing camps of experts dispute the correct set of priorities to emphasize among the above when directing how math is taught in K-12 classrooms.

Recently, the debate over math instruction has been mistakenly rolled into the debate over the Common Core and other state math standards. These standards are a set of academic targets. Their stated purpose is to create a roadmap for what students need to know in which grades to become college and career ready. Backers of the standards say they were intentionally written to be flexible—so states, districts, and educators wedded to different teaching styles coul...



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Phil's Favorites

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

US consumer confidence explodes to the highest level since 2000 (Business Insider)

US consumer confidence spiked to a 16-year high in March, according to the Conference Board's monthly survey. 

Traders betting against Wall Street's favorite Trump trade are making a killing (Business Insider)

The biggest beneficiaries of the so-called Trump rally are giving up some of the gains they made after the election.

...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

US consumer confidence explodes to the highest level since 2000 (Business Insider)

US consumer confidence spiked to a 16-year high in March, according to the Conference Board's monthly survey. 

Traders betting against Wall Street's favorite Trump trade are making a killing (Business Insider)

The biggest beneficiaries of the so-called Trump rally are giving up some of the gains they made after the election.

...



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Chart School

Rallies Come Through

Courtesy of Declan.

Bulls were able to deliver across the board gains, helping to position yesterday's action as a swing low. Weakness at this point would offer itself as a buying opportunity, but markets wouldn't tolerate more than a couple of days of losses if they were to go down this route.

The S&P is at resistance of the prior swing low and the 20-day MA, but today's action is looking good for an upside break tomorrow? Technicals are firmly in the red and need more than today's gain to fix them.



The Nasdaq did today...

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Kimble Charting Solutions

Silver bear market could end here!

Courtesy of Chris Kimble.

Below looks at the performance of Silver, Gold and the S&P 500 year to date. Metals and miners are off to a good start in 2017. Even though the stock market has received a good deal of attention this year, metals have done even better. Is the performance in 2017 the start of something even bigger for Silver & Gold?

CLICK ON CHART TO ENLARGE

It’s been a long time since buy and holders have experienced a bull market in Silver. How long has it been? Silver has created a series of lower highs since 2011. The trend ...



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OpTrader

Swing trading portfolio - week of March 27th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Members' Corner

More Natterings

Courtesy of The Nattering Naybob

[Click on the titles for the full articles.]

A Quick $20 Trick?

Summary

Discussion, critique and analysis of the potential impacts on equity, bond, commodity, capital and asset markets regarding the following:

  • Last time out, Sinbad The Sailor, QuickLogic.
  • GlobalFoundries, Jha, Smartron and cricket.
  • Quick money, fungible, demographics, QUIK focus.

Last Time Out

Monetary policy is just one form of policy that effects capital,...



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Digital Currencies

Bitcoin Tumbles Below Gold As China Tightens Regulations

Courtesy of Zero Hedge

Having rebounded rapidly from the ETF-decision disappointment, Bitcoin suffered another major setback overnight as Chinese regulators are circulating new guidelines that, if enacted, would require exchanges to verify the identity of clients and adhere to banking regulations.

A New York startup called Chainalysis estimated that roughly $2 billion of bitcoin moved out of China in 2016.

As The Wall Street Journal reports, the move to regulate bitcoin exchanges brings assurance that Chinese authorities will tolerate some level of trading, after months of uncertainty. A draft of the guidelines also indicates th...



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Mapping The Market

Congress begins rolling back Obama's broadband privacy rules

Courtesy of Jean Luc

I am trying to remember who on this board said that people wanted to Trump because they want their freedom back. Well….

Congress begins rolling back Obama's broadband privacy rules

By Daniel Cooper, Endgadget

ISPs will soon be able to sell your most private data without your consent.

As expected, Republicans in Congress have begun the process of rolling back the FCC's broadband privacy rules which prevent excessive surveillance. Arizona Republican Jeff Flake introduced a resolution to scrub the rules, using Congress' powers to invalidate recently-approved federal regulations. Reuters reports that the move has broad support, with 34 other names throwing their weight behind the res...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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Biotech

The Medicines Company: Insider Buying

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

I'm seeing huge insider buying in the biotech company The Medicines Company (MDCO). The price has already moved up around 7%, but these buys are significant, in the millions of dollars range. ~ Ilene

 

 

 

Insider transaction table and buying vs. selling graphic above from insidercow.com.

Chart below from Yahoo.com

...

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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