“Today’s liquidity conditions are like the waters receding before a giant wave.”
“The coronavirus outbreak and the shock that preventative measures introduced to manufacturing and services activity will lead to missed payments globally. …
… Missed payments will force more and more firms to become deficit agents; as this cascades, banks and regional banking systems will become deficit agents”
#NowPlaying Desth Drive by HMLTD on #YouTube
“Our main concern is about missed payments of U.S. dollars globally, as local central banks can deal with missed payments in local currency fairly easily.
…
…
… Dollar funding is always the orphaned child of crises as the regions where the pressures flare up have no control over it and the Fed, …
… uncomfortable with the reality of it being the de facto central bank of the world, takes time to step in...
... not necessarily in terms of rate cuts, but in terms of adding liquidity.”
... not necessarily in terms of rate cuts, but in terms of adding liquidity.”
“due to the inversion, money funds have seen $600 billion of inflows last year, most of which went to fund dealers’ and hedge funds holdings of Treasuries. …
… Aggressive rate cuts could send those funds back to the bond market, just when the funds are needed in the money market due to missed payments”
#NowPlaying Deleters by Holy Fuck on #YouTube
"FX reserves are plentiful, global banks have liquidity buffers and the standing FX swap lines are there to add liquidity. But …
… 👉FX reserves need to be monetized👈, the outbreak may reveal some design problems of Basel III, and FX swap lines
are not for everyone. A lot can go wrong with the system’s immune system..."
are not for everyone. A lot can go wrong with the system’s immune system..."
👉FX reserves need to be monetized👈
Translation: They are not money.
Just in case you are really, really slow.
Translation: They are not money.
Just in case you are really, really slow.
"may reveal some design problems of Basel III"
"The biggest risk we see to the plumbing is the Fed cutting rates aggressively, without pledging an 👉open-ended👈 liquidity support through its balance sheet"
Remember all those oversubscribed TOMO's, anyone...?
(Since September, not January, BTW.)
Remember all those oversubscribed TOMO's, anyone...?
(Since September, not January, BTW.)
"According to ancient Andaman folklore, when you see the waters disappear, move inland and get to the highest point you can find, away from the shoreline."
…
…
…
"As banks hoard the highest form of liquidity – reserves – the periphery will come knocking for liquidity. Now’s not the time to end QE. It’s time to lean in… "
"As banks hoard the highest form of liquidity – reserves – the periphery will come knocking for liquidity. Now’s not the time to end QE. It’s time to lean in… "
#NowPlaying️ List Of Demands by The Kills #YouTube
The thing they don't appear to see (because they are too close to the elephant in the room), is that they can see all these assets are not money, including bank deposit liabilites as well as everything else.
But they don't realise that the Fed SHOULD NOT, really, just monetise.
But they don't realise that the Fed SHOULD NOT, really, just monetise.
I mean, think about it.
It's like saying "this stock is rising - you absolutely have to put together an offering immediately, because it's not working for me as a result of the gigantic short I have on".
Capitalism when I'm winning, Socialism when I'm not.
Know wot ah mean..?
It's like saying "this stock is rising - you absolutely have to put together an offering immediately, because it's not working for me as a result of the gigantic short I have on".
Capitalism when I'm winning, Socialism when I'm not.
Know wot ah mean..?
If not, don't worry because I'm here to help!
All I am saying is all that I ever seem to have been saying.
Namely: only base money ("bank reserves" + "notes and coin") is [public] money. All else is [private credit". (With thanks for J.P.Morgan)
All I am saying is all that I ever seem to have been saying.
Namely: only base money ("bank reserves" + "notes and coin") is [public] money. All else is [private credit". (With thanks for J.P.Morgan)
And that's why I say all these people should fuck right off with their demands that the Central Banks must provide whatever "liquidity" is demanded by them and their financial sector pals.
Seriously. Fuck right off.
Seriously. Fuck right off.
It's your problem.
You made it.
Deal with it.
FUCK OFF.
You made it.
Deal with it.
FUCK OFF.
You were not doing God's work when you built this huge bonfire.
And you're certainly not doing it now as it's just catching on fire and you're demanding everyone else build a pipeline and divert all the water on earth to reverse your stupid mistake.
BURN.
And you're certainly not doing it now as it's just catching on fire and you're demanding everyone else build a pipeline and divert all the water on earth to reverse your stupid mistake.
BURN.
Burn all the way down to hell you fuckers. 
Watch these collapse and hit the floor, and then watch the world suck down every last crinkled battered, filthy, tarnished quarter and nickel they can get their hands on.
Except. Get this. It won't get to that level, because these people WILL get what they want well before that.
Except. Get this. It won't get to that level, because these people WILL get what they want well before that.
(smile) Worthless dollars, of course, but no deflation in dollar terms! (bigger smile)
"The time between the initial flare-up of stresses and the Fed’s ultimate response is STIR traders’ window of opportunity"
Clear enough for you..?
Clear enough for you..?
But enough of this self-indulgent piss-and-vinegar-fest now.
(Apologies to all those who enjoy these outbursts.)
(Apologies to all those who enjoy these outbursts.)
Something for the weekend..?
"Beginning with today’s operation and through March 12, 2020, the Desk will increase the amount offered in daily overnight repo operations from at least $100 billion to at least $150 billion."
nyfed.org/2v5MGnk
nyfed.org/2v5MGnk
"In addition, the Desk will increase the amount offered in the two-week term repo operations on Tuesday, March 10, 2020 and Thursday, March 12, 2020 from at least $20 billion to at least $45 billion."
Don't worry my lil pups, we will save you from this HUGE BONFIRE YOU BUILT! 😕
Don't worry my lil pups, we will save you from this HUGE BONFIRE YOU BUILT! 😕
"They should help support smooth functioning of funding markets as market participants implement business resiliency plans in response to the coronavirus"
Yeah - coz it's only Corona init. It'll be over in a minit.
Yeah - coz it's only Corona init. It'll be over in a minit.
Hoses ready.
Pedals ready.
G…
Pedals ready.
G…
Jerome is sharpening the blades on his hair clippers in readiness.
This is not getting boring!
[It's getting a lot of things, but boring is not one of them…]
[It's getting a lot of things, but boring is not one of them…]
Notice how they talk here like this is over by the end of March, and yet the Tbond market is telling you it will be worse in a year that it will be in 3 months, which will be much worse than it is now..?
#WeWatch…
#WeWatch…
Also on the plus side, the Tbond market is saying it's less bad in 2 years than in 1 year.
But, hey. they can't be 100% right eh?
But, hey. they can't be 100% right eh?
Seems like only the end of last week they said they were not considering this.
Oh, wait. It was.
Well, I don’t know about you but I’m shocked. And completely surprised.
Oh, wait. It was.
Well, I don’t know about you but I’m shocked. And completely surprised.
Number go down?
No, number not go down.
No, number not go down.
“We are likely to see the lowest oil prices of the past 20 years in the next quarter,” Arab News’ Frank Kane quoted an IHS Markit analyst as saying.
bit.ly/2TL6jcI
bit.ly/2TL6jcI
And a GoR to match..?
What with US markets being halted, StockCharts cannot oblige us with our panum et circus just now.
So let's go with the Bloomview instead I guess… [bloom.bg/2Q134wz]
So let's go with the Bloomview instead I guess… [bloom.bg/2Q134wz]
If you need credit, you are in trouble.
And, of course, you do need credit.
Not even $150bn.
What problem?
What problem?
Well below the limit of the facility.
"There is also concern over litigation risk, including the probability that some foreign investors could file a lawsuit asking the authorities in the U.S. to impound Lebanon’s [SHHH! do not speak its name] assets there, according to Fitch."
bloom.bg/2TAlKp9
bloom.bg/2TAlKp9
PHYSICAL gold.
Not "gold". But PHYSICAL gold. 👌
"Foreign investors" are not stupid. They know "gold" is worthless -- after all… they create and sell it, right? So who would know better than them..? 😉
Not "gold". But PHYSICAL gold. 👌
"Foreign investors" are not stupid. They know "gold" is worthless -- after all… they create and sell it, right? So who would know better than them..? 😉
BTC
See? Eveything is now back to normal, the yield curve is totally not inverted any more!
Yes yes, the 30y yield is just under 1.00% -- pay no attention to the yield behind the curtain!
Fed cut in…
Nothing to see here
Well, this is awkward isn't it?
I can no longer get all of the RP/RRP operations for the day onto a single screenshot for you.
DON'T THESE PEOPLE EVER THINK OF ANYONE BUT THEMSELVES?!?
I can no longer get all of the RP/RRP operations for the day onto a single screenshot for you.
DON'T THESE PEOPLE EVER THINK OF ANYONE BUT THEMSELVES?!?
I mean, gaaaaahd!
I'm a busy person (contrary to appearances I'm sure).
DON'T THEY REALISE I DON'T HAVE MORE TIME BECAUSE OF THIS CRISIS - LIKE THEM I HAVE LESS AS A RESULT OF IT?!?
#SoInconvenient #SoSelfish
I'm a busy person (contrary to appearances I'm sure).
DON'T THEY REALISE I DON'T HAVE MORE TIME BECAUSE OF THIS CRISIS - LIKE THEM I HAVE LESS AS A RESULT OF IT?!?
#SoInconvenient #SoSelfish
Aside from the sheer number of ops yesterday, the only real things of note about them are:
1) The rates on the longer term ops vs short.
2) Surprising (to me) there was not a much bigger number on the term ops.
3) check that RRP size & number of participants.
#WeWatch…
1) The rates on the longer term ops vs short.
2) Surprising (to me) there was not a much bigger number on the term ops.
3) check that RRP size & number of participants.
#WeWatch…
"These changes are being made to address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak."
Yeah. Shur.
IT'S ALL JUST THE VIRUS GOYZ! 😉👍
Yeah. Shur.
IT'S ALL JUST THE VIRUS GOYZ! 😉👍
Cannae keep up unfortunately, so sorry for the poor service level goyz.
HOWEVER.....
LOLOLOLOLOLOLOLOLOLOLOLOL....
HOWEVER.....
LOLOLOLOLOLOLOLOLOLOLOLOL....
Keep watching the birdie
Still getting better every day. No shortage of what the Fed can create. A shortage of what the Fed has a limited (but admittedly reasonably extensive) supply of.
Best show on earth?
For horror movie aficionados perhaps.
Best show on earth?
For horror movie aficionados perhaps.
Is the Fed listening?
Oh, you betcha. How could they not hear the roar?
But they just are not omnipotent after all. Who knew....? 🤷♂️
Oh, you betcha. How could they not hear the roar?
But they just are not omnipotent after all. Who knew....? 🤷♂️
Nobody, but nobody, has a clue how bad this is going to be.
For the US.
And "its" dollar.
For the US.
And "its" dollar.
Not even the supercool hedgefund managers of the world, used to handling like a quarter of US GDP, say.
For example.
For example.
"I think people are getting wise to the fact that an absolute tsunami of global sovereign debt issuance is on its way. Best to sell it all to the fed now probably."
bit.ly/2Upbuk5
bit.ly/2Upbuk5
RRP now added to the list of "it didn't happen" items at the Fed, along with those longer dated RPs that don't make it into the feed any more.
So on the one hand you have people looking at all this and thinking "get rid of those Tbills goyz! Tsunami alert! Get dawlarz!"
And on the other we watch the market come to the Fed in increasing size for HQLA vs dawlarz they don't have a better use for.
YOU DECIDE!
And on the other we watch the market come to the Fed in increasing size for HQLA vs dawlarz they don't have a better use for.
YOU DECIDE!
#NowPlaying Parallel Space by Forest Drive West on #YouTube
Friday fun.
I wonder what today will bring....
I wonder what today will bring....
Now THAT is what I call "not QE"!
😎👌
🥇
😎👌
🥇
It never occurs to any of these people that this accounting sleight of hand is just not going to fix the true underlying problem, does it?
"Something for the weekend?"
<over a fifth of a trillion dawleurs disappears, replacced with HQLA that is what's really needed and is busy stinkin up the Fed's balance sheet anyway 🙌>
<over a fifth of a trillion dawleurs disappears, replacced with HQLA that is what's really needed and is busy stinkin up the Fed's balance sheet anyway 🙌>
What yesterday brought was "more of that". With +1 counterpart and ~+$20B of Treasuries demanded for useless base cash.
EPIC WINNING👌
EPIC WINNING👌
Meanwhile, the RP demand was "basically no thanks".
Because nobody likes money, they only want Tbills. 👍
Because nobody likes money, they only want Tbills. 👍
Makes no sense, right?
But then you remember…
But then you remember…
And then you realise....
Only a member bank has or can have base USD, aside from a stinkin vault full of illiquid green paper stacks that I'm too sophisticated for!!!!11
Only a member bank has or can have base USD, aside from a stinkin vault full of illiquid green paper stacks that I'm too sophisticated for!!!!11
Some everyone else thinks they're getting a USD, if they have a G-SIB deposit liability.
(Spoiler: they're not)
And the G-SIBs (many of whom also cannot hold base USDs at the Fed BTW) keep Tbills as their "100% HQLA" reserves.
(Spoiler: they're not)
And the G-SIBs (many of whom also cannot hold base USDs at the Fed BTW) keep Tbills as their "100% HQLA" reserves.
So, hopefully if you've taken your eye off the TV for a minute and kept reading, you understand now?
Just wait until everyone else figures this out!
Oh, boy!
Won't THAT be something!
Oh, boy!
Won't THAT be something!
Ratchet
(Financial) Year end is done for now. 👍
Tellin ya - it's nuffink init bruvs!
Who needs it, when FIMA gives you a mini-mommy in your own back yard? 🤷♂️
Seriously, FIMA is so super-awesome, nobody would know we have a problem any more!
#FedGoSleepyByebyeTimeNow
#FedGoSleepyByebyeTimeNow
Notice how FIMA arrived, and suddenly the problem is back to a moderate lack of "cash" (AKA "G-SIB bank deposits"), as manifest by the Fed repo program demand.
Rather than a that huge lack of collateral (AKA "demand for Fed reverse repo program") that had shown up less recently.
Rather than a that huge lack of collateral (AKA "demand for Fed reverse repo program") that had shown up less recently.
This implies:
(a) that the Eurodollar banks are being satisfied now by their local Central Banks, so the problem is not showing up in the Fed programs, but is still there.
(b) that there is insufficient lending by Eurodollar G-SIBs, to satisfy the demand for "cash".
And …
(a) that the Eurodollar banks are being satisfied now by their local Central Banks, so the problem is not showing up in the Fed programs, but is still there.
(b) that there is insufficient lending by Eurodollar G-SIBs, to satisfy the demand for "cash".
And …
(c) that absent intervention by the Fed into the global Eurodollar banking non-system, there would be pandemonium and collapse all around the world.
#CapitalismFTW!!!!11
#CapitalismFTW!!!!11
Basically, the Fed provides the other Central Banks with free money swaps, so they keep their "reserves" (of USTs, not USDs) off the market.
Because the US and global economy just can't tolerate that strong of a USD.
Because the US and global economy just can't tolerate that strong of a USD.
And this then allows the local Central Banks to keep their member banks' bids for USD off the FX market.
Everyone's a winner, right?
WRONG. Everyone is a loser really.
#FreemarketFTW???1111
Everyone's a winner, right?
WRONG. Everyone is a loser really.
#FreemarketFTW???1111
The US are now on the flip side of awesome. 👌
When a single medium is used as both store of value and medium of exchange, it leads to a conflict between debtors and savers.
The solution is for the imbalances to be cleared with real goods (eg: gold bullion -- as is tradition), which resolves Triffin's dilemma.
The solution is for the imbalances to be cleared with real goods (eg: gold bullion -- as is tradition), which resolves Triffin's dilemma.
Back in the days of yore (AKA the much vaunted "gold standard"), money was never gold.
Money was always fiat and tokens of credit.
All the fixed exchange rate for gold did, was give the illusion that all savers of the tokens could have gold if they just asked for it.
Money was always fiat and tokens of credit.
All the fixed exchange rate for gold did, was give the illusion that all savers of the tokens could have gold if they just asked for it.
It also made the obvious tradition of clearing imbalances of token debts/credits, well.... more obvious.
But the tradition is alive and well all this time. Just without the commitment to exchange at a fixed price.
And the in-your-face obviousness.
But the tradition is alive and well all this time. Just without the commitment to exchange at a fixed price.
And the in-your-face obviousness.
It's easy to see why people, uninterested in thinking about anything as mundane and unimportant to them as money, can forget such a longstanding tradition.
But the consequences of not thinking, are on them.
But the consequences of not thinking, are on them.
