Posts Tagged ‘New York Fed memo’

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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Zero Hedge

Press Freedom? Dakota Access Pipeline Documentarian Faces 45 Years In Prison For Filming Activists

Courtesy of ZeroHedge. View original post here.

A couple of days ago we noted that protests in North Dakota, over the Dakota Access Pipeline, were growing increasingly hostile with police arresting over 125 people just last weekend alone.  Another startling discovery from the weekend was reports of police efforts to shoot down multiple media drones which some thought indicated an increasing hostility toward press seeking to cover the protests. ...

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Ed Thorp's "Beat the Market" And Risk Management

By David Merkel. Originally published at ValueWalk.

A question from a reader on my recent post Me Too!:

I recently ran across Ed Thorp’s “Beat the Market.” I find reasonable his idea that you can take on risks that (almost / essentially) cancel each other out. Find assets that are negatively correlated to buy one long and the other short (he did it with stock warrants in the 60’s but when I started looking into that, well, I’m...

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Phil's Favorites

Brexit Common Sense From Sweden; Export Pain and EU Goats

Courtesy of Mish.

No one wins trade wars. And it makes no sense to try. At long last someone has figured that out, most likely because a trade collapse has already started.

Please consider Sweden Holds Out Olive Branch to Brexit Britain.

Sweden has warned that it would be a serious mistake to chastise Britain for voting to leave the EU, appealing instead for an amicable settlement to minimise damage for both sides.

“The softer the Brexit, the better. We’re an open country and we are in favour of free trade, and we want to see a solution that is as beneficial as possible for everybody,” said Magdalena Andersson, the Swedish finance minister....

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Chart School

Tech Hold Breakout,.but S&P Wedge Bound

Courtesy of Declan.

It was a mixed day for indices. Large Caps remain bound by wedge support/resistance, but Tech broke upside yesterday from similar wedges and held those breakout today.

There was little change for the S&P over the last couple of days. The one technical change was the MACD trigger 'buy' as other technicals stayed on the bearish side.

Meanwhile, the Nasdaq cleared wedge resistance yesterday, and was able to hang on to the breakout despite today's loss. It too enjoyed a MACD trigger 'buy', but had an On-Bal...

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Kimble Charting Solutions

U.S. Dollar Rally: A tale of two chart patterns

Courtesy of Chris Kimble.

This article was originally written for See It Market.

The U.S. Dollar Index has been trading in a wide consolidation pattern over the last 18 months or so.  But after the recent U.S. Dollar rally, that consolidation has formed two distinct chart patterns.

And as you may have guessed… one is bullish while the other is bearish.



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Market News

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Financial Markets and Economy

Oil Rises as OPEC Chief Barkindo Seeks to Resolve Output Plan (Bloomberg)

Crude advanced as OPEC’s secretary-general was due to visit Baghdad on Tuesday for talks aimed at resolving a deal on output after Iraq said it should be exempt from planned cuts.

Iron Ore Hoisted on Coat-Tails of Coal’s Record Rally in China (Bloomberg)

Iron ore is surging thanks to its bulk-commodity compatriot, coal. Iron ore futures in Singapore ad...

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Members' Corner

A Lack of Faith, Disturbing?

Courtesy of Nattering Naybob.

Over at Philstockworld... High Finance for Real People - Fun and Profits...   

Phil – "long-term rates are suddenly ticking up as bond buyers have lost faith that the Central Banksters will be able to keep a lid on inflation"More so a rebirth of hope for much needed monetary flows in the form of "dollars" and some form of economic recovery rising in the distance.  Good luck there.  

By now those rogue bond traders should know the power of the dark side and all the carnage which that widow makers trade has left in its wake. J...

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Swing trading portfolio - week of October 24th,2016

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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Mapping The Market

The Most Overlooked Trait of Investing Success

Via Jean-Luc

Good article on investing success:

The Most Overlooked Trait of Investing Success

By Morgan Housel

There is a reason no Berkshire Hathaway investor chides Buffett when the company has a bad quarter. It’s because Buffett has so thoroughly convinced his investors that it’s pointless to try to navigate around 90-day intervals. He’s done that by writing incredibly lucid letters to investors for the last 50 years, communicating in easy-to-understand language at annual meetings, and speaking on TV in ways that someone with no investing experience can grasp.

Yes, Buffett runs an amazing investment company. But he also runs an amazing investor company. One of the most underappreciated part of his s...

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Digital Currencies

Gold, Silver and Blockchain - Fintech Solutions To Negative Rates, Bail-ins, Currency Debasement and Cashless

Courtesy of ZeroHedge. View original post here.

By Jan Skoyles

I was so pleased yesterday by the announcement that I have joined the Research team at GoldCore as it meant that I could finally start talking about it and was back in a role that lets me indulge in my passion by researching and geeking out on all things gold, silver and money.


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Epizyme - A Waiting Game

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

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...

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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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PSW is more than just stock talk!


We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more! features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...

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