Posts Tagged ‘reverse repos’

Federal Reserve Eyes the US Money Market Funds

Federal Reserve Eyes the US Money Market Funds

Courtesy of Jesse’s Café Américain

[baghdadben.JPG] The Fed is holding a significant amount of assets on its books in the form of Treasuries. For example, the Fed has purchased an enormous amount of US Treasury issuance in the past six months as part of its quantitative easing program, aka monetization. It has also taken on tranches of mortgage debt obligations from the banks, purportedly to improve the banks capitalization profile because of the dodgy nature of the assets.

This has added significant short term liquidity to the system, much of it held by the banks for interest at the Federal Reserve itself.

At some point the Fed will wish to reduce the levels of liquidity in the system. One way to do this is by increasing interest rate targets. It can achieve this, for example, by increasing the amount it pays for reserves.

The traditional way for the Fed to drain liquidity is to conduct what is known as a reverse repurchase agreement, or reverse repo.

In a normal repurchase agreement or repo, the Fed purchases assets held by the banks, normally Treasuries, which obviously increases the ‘cash’ being held by the bank. A repurchase agreement is by definition for a specific amount of time. At the end of the period the Fed sells the asset back to the bank. The difference in amounts is the ‘interest’ which changes hands for the transaction.

There is also a type of purchase agreement with no buyback. It is known as a PMO, or Permanent Market Operation. These are used to add liquidity as the name implies, permanently.

A reverse repo is just the opposite. In this case, the Fed sells an asset from its balance sheet to an institution for ‘cash’ and thereby drains or takes cash liquidity out of the system.

Aren’t Treasuries as good as ‘cash?’ Why does it matter whether a bank is holding Treasuries or cash on its books? Apparently not the case, at least for accounting and regulatory purposes. Remember that the next time someone tells you that banks do not need depositors. Sometimes they do.

Typically the Fed has only done this type of operation with a group of about twenty or so financial institutions known as the Primary Dealers.

According to this news piece, the reason the Fed is looking to the…
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Meet the new 'renewable superpowers': nations that boss the materials used for wind and solar

 

Meet the new 'renewable superpowers': nations that boss the materials used for wind and solar

Blue Planet Studio / shutterstock

Courtesy of Andrew Barron, Swansea University

Imagine a world where every country has not only complied with the Paris climate agreement but has moved away from fossil fuels entirely. How would such a change affect global politics?

The 20th century was dominated by coal, oil and natural gas, but a shift to zero-emission energy generation and transport means a new set of elements will become key. Solar energy, for instance, still primarily uses silicon technology, for which the major raw material is the rock quartzite. Lithium represe...



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Zero Hedge

North Korea Bailed At The Last Minute On Secret Meeting With Pence

Courtesy of Zero Hedge

Two weeks ago, followers of geopolitics couldn't help but speculate about the chances of a clandestine meeting between North Korea and the US when the news first broke that North Korean leader Kim Jong Un's younger sister, Kim Jo Yang, would be attending the Winter Games in PyeongChang.

After all, US Vice President Mike Pence was already confirmed to be stopping by South Korea during the beginning of the Games as part of a five-day Asia tour. But the White House was quick to repudiate this chatter, announcing that there were no plans for diplomatic talks, though both US and North Korean rhetoric since then has left the door open for such a meeting.

But as it turns out, just as the White House was denying it, plans for talks were being set in motion...



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Chart School

Sellers Come In But Semiconductors Gain

Courtesy of Declan.

Markets were set up for sellers with most indices experiencing broad selling. However, the one index which looked set up best for shorts - the Semiconductor Index - actually managed to gain.  Anyone taking up Friday's short in the latter Index will have been stopped out but another shorting opportunity may have presented itself. Technicals haven't returned to becoming net bullish but only the ADX remains to shift.


The S&P eased a little lower but didn't return below what was channel support. Te...

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ValueWalk

Bill Nygren's Stock Picks

By VW Staff. Originally published at ValueWalk.

Bill Nygren, Harris Associates U.S. equities CIO and Oakmark Funds portfolio manager, shares his top stock picks and long-term investment strategy.

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Insider Scoop

Stifel Sees Reboot Opportunity For Chipotle, Upgrades From Sell To Hold

Courtesy of Benzinga.

Related CMG Benzinga's Top Upgrades, Downgrades For February 20, 2018 The Market In 5 Minutes: Albertsons-R...

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Digital Currencies

As Bitcoin Nears $11,000, Here's A History Of Its Biggest Ups And Downs

Courtesy of ZeroHedge. View original post here.

The cryptocurrency rebound off Feb 5th's bloodbath lows (below $6,000 for Bitcoin) has been impressive, as a 'mysterious' massive buyer 'bought the dip' and momentum took care of the rest.

With Bitcoin now nearing $11,000 (almost a double off the lows), ...



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Biotech

What is 'right to try,' and could it help?

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

 

What is 'right to try,' and could it help?

In this March 18, 2011 photo, Cassidy Hempel waved at hospital staff as she was being treated for a rare disorder. Her mother Chris, left, fought to gain permission for an experimental drug. AP Photo/Marcio Jose Sanchez

Morten Wendelbo, Texas A&M University and Timothy Callaghan, ...



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Mapping The Market

The tricks propagandists use to beat science

Via Jean-Luc

How propagandist beat science – they did it for the tobacco industry and now it's in favor of the energy companies:

The tricks propagandists use to beat science

The original tobacco strategy involved several lines of attack. One of these was to fund research that supported the industry and then publish only the results that fit the required narrative. “For instance, in 1954 the TIRC distributed a pamphlet entitled ‘A Scientific Perspective on the Cigarette Controversy’ to nearly 200,000 doctors, journalists, and policy-makers, in which they emphasized favorable research and questioned results supporting the contrary view,” say Weatherall and co, who call this approach biased production.

A second approach promoted independent research that happened to support ...



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Members' Corner

An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

Ilene: David, you base many of your predictions of the future on a theory of historica...



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OpTrader

Swing trading portfolio - week of September 11th, 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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Promotions

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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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All About Trends

Mid-Day Update

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

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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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