iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
20,568 Blog Posts

MARKET GETS A BOOST AFTER FED LAUNCHES ‘MAIN STREET’ FACILITIES

Last night Fed’s Kashkari said the Fed had “unlimited” money in order to fix the financial system. This morning the Fed announced they will buy corporate bonds geared towards Main Street, including the purchase of corporate bond ETFs. This means, like Japan, the Fed will be buying LQD — like morons, in a flaccid attempt to boost markets.

Can you blame them? This is all we have left.

Among the initiatives is a commitment to continue its asset purchasing program “in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.”

That represents a potentially new chapter in the Fed’s “money printing” as it commits to keep expanding its balance sheet as necessary, rather than a commitment to a set amount.

The Fed also will be moving for the first time into corporate bonds, purchasing the investment-grade securities in primary and secondary markets and through exchange-traded funds. The move comes in a space that has seen considerable turmoil since the crisis has intensified and market liquidity has been sapped.

Other initiatives include an unspecified lending program for Main Street businesses and the Term Asset-Backed Loan Facility implemented during the financial crisis. There will be a program worth $300 billion “supporting the flow of credit” to employers consumers and businesses and two facilities set up to provide credit to large employers.

Futures went from ‘limit down’ to +500 to now milquetoast flat and sinking fast. How to analyze this? The Fed is throwing everything but the kitchen sink at the bond market now. The very last step would be the outright purchase of stocks, which is illegal — but who’s gonna stop them? Trump?

Bullish or bearish — gun to the head. UNSURE. Let’s see how the market trades.

NOTE: I had a double sized FAZ position heading into today. I sold it for +10%. I am presently 90% cash.

If you enjoy the content at iBankCoin, please follow us on Twitter

24 comments

  1. Orson

    The US is their own worst enemy. Oh my, using a word like that. How many times can you shoot yourself in the foot?

    • 0
    • 0
    • 0 Deem this to be "Fake News"
  2. heckler

    I wonder how long it took to drain Rand Paul’s germs out of the Senate pool? hahaha

    • 0
    • 0
    • 0 Deem this to be "Fake News"
  3. numbersgame

    The FED has no idea of what it’s doing – and neither does anybody else.

    This is like losing at Roulette, overe and over, and then doubling down each time. If you ahve Infinite Cash, then you’ll eventualyl come out ahead. However, no one has infinite cash.

    I sold ALL my 30yrs, because if the FED is buying trash, then why hold quality? However, rest assured that this day will also live in infamy. I do not know when the House of Cards will end, but I do know that the FED pulled that day forward.

    In my 100% honest opinon, in their desperate move to save the Stock Market, the FED has guranteed that we hit a Depression witihn the next 2 years. The stock market is NOT the economy. The reason that the bond markets and commercial paper markets are so screwed up, is because nobody is actaully doing calcautions on default rates, but instead tryign to predict when/how the Fed and Treasury will bail them out. The markets are broken. Game over.

    BTW, I also simultaneously beleive that the market will likely bottom today, but if it doesn’t then you can subtract at least 12 months from my “2 yr” estimate.

    • 0
    • 0
    • 0 Deem this to be "Fake News"
    • alty

      Like bottom bottom?

      • 1
      • 0
      • 0 Deem this to be "Fake News"
      • numbersgame

        If it doesn’t bottom today (for at least a long time), then it basically never will…

        Lquditiy problem examples:
        – You’re mortgage is due today, but you get paid tomorrow
        – You have a huge order for your product, but don’t have the cash for raw materails (see “Shark Tank”)
        – You think stocks are a huge bargain, but you have no cash to buy more

        When their is a *real* liquidity crunch, this means that prices fall below fair value temporarily. Strong hands buy at firesale prices from weak hands. Foreclosure sales, for example.

        The FED claims that the problem is liquidity in variosu fixed income markets. Well, now the FED said that they would buy all Treasuries, they would buy Corporaet investemtn grade bonds, inlcuding “fallen angels” that are bascailly junk bonds. Therfore, the FED is provding price support to keep itesm from reaching fire sale prices. The FED is is essentailly loaning money directly to non-finacial firms now through these bond purchases, so it makes the COngressional bil almost moot.

        So if the issue *really* is liquidity, and not that assets such as bonds are overpriced, then the problem should be solved by their action today.

        https://www.cnbc.com/2019/01/22/fallen-angels-are-posing-the-biggest-threat-to-the-bond-market-this-year.html

        • 0
        • 0
        • 0 Deem this to be "Fake News"
    • numbersgame

      “Finally, Grant, whose wife is a physician, reminded the anchors that the current actions (and consequences) have a direct analogy with the opioid crisis, as ‘in the early 2000s, the medical profession got it into its head that pain was the vital sign, and that no one ought to be in pain… this led to the deadly over-prescription of opioids.’ ”

      https://www.zerohedge.com/markets/jim-grant-warns-feds-all-actions-are-clear-and-present-danger-us-creditors

      • 0
      • 0
      • 0 Deem this to be "Fake News"
  4. bambam

    FED toast

    • 0
    • 0
    • 0 Deem this to be "Fake News"
  5. tjnyt

    I am not a researcher but just a foot soldier in the fight against COVID. My views were based purely on my own experience. Here is a researcher saying exactly the same although he has all the tools needed for a researcher.
    https://www.latimes.com/science/story/2020-03-22/coronavirus-outbreak-nobel-laureate

    “Michael Levitt, a Nobel laureate and Stanford biophysicist, began analyzing the number of COVID-19 cases worldwide in January and correctly calculated that China would get through the worst of its coronavirus outbreak long before many health experts had predicted.

    Now he foresees a similar outcome in the United States and the rest of the world.”

    • 0
    • 0
    • 0 Deem this to be "Fake News"
    • numbersgame

      Cuomo said on Friday that they were running something like 15,000 tests a day, and gettign 4800 positives. At that ratio, it means the virus is spreading like wildfire. Your 2000 death target will liekly be met by New York State alone.

      New York = Italy

      I also suspect that Florida will become a hot spot once they ramp up testing, but this is more of a theory.

      Also his article says that 8 died on Grand Princess, when the number is actually 11 and many haven’t recovered yet. And social distancing works – but only whn it is implemented. The US approach is to wait fro a breakout, then apply social distanceing, otherwise we’d have it in 30 states by now.

      As for China, it’s utter bullshit. Germany and Japan are the gaols (SK out of reach).

      Hopefully chroloquin will work, which is about the only hope for New York. The godd news is that it works in test tubes. The bad news is that all of the articles quoting the Fench study missed a very important element: there were originall 16 subjects in the control group (no medicine) and 26 in the experimental group. EVERY article I’ve read, only tells the story about 20 of the 26 experiementla group because 6 were dropped form the study:
      1 dropped out when they doing well,
      1 dropped out when they were doing okay
      3 were dropped when they wer TRANSFERED TO INTENSIVE CARE
      1 was dropped because THEY DIED
      …but the **other** 20 did pretty well
      (Anybody else acatully read the lab report)

      • 0
      • 0
      • 0 Deem this to be "Fake News"
      • tjnyt

        You have comprehension deficit and you like to disagree just for the sake of it into areas you have no idea. As for your info, garbage in garbage out. Look only at the total US deaths, don’t confuse with Italy.

        • 0
        • 0
        • 1 Deem this to be "Fake News"
        • numbersgame

          Listen, this is about statistics, math, modeling, not medicine. Here’s chart showing how Rest of World is rising at a steady exponential rate, not leveling off: Don’t need a medical degree to read it.

          I don’t think NY case count is significant. I *do* their positive-test resutls rate is VERY significant (>25%).
          US Italy
          NY = Italy

          Either way, I don’t see a point in trying to argue somethign when we’ll have a definitive answer in a week.

          “I’ll be back”

          • 0
          • 0
          • 0 Deem this to be "Fake News"
        • numbersgame

          Garbage in, garbage out:
          1) “Out of 3,711 people on board, 712 were infected and eight died.”
          2) Data out of Chinese governement

          Ok, now I’m done for sure

          • 0
          • 0
          • 0 Deem this to be "Fake News"
    • heckler

      I am a researcher and these are increasingly becoming my views as well. There are several factors at play: Italy – besides not being cleaned since like 4 BC, these motherfuckers kiss each other upon meeting and long family dinners are enjoyed weekly. China – they all live on top of each other like rats. Cruise ships – similar. NY – very dense population and close quarters are prevalent.

      I’m most familiar with the data here in Seattle. We are only finding 200-300 new cases per day despite increasing our testing hundreds of times over (this will be an important week for our data). Seattle is not that dense. There’s lots of breezy fresh air, and people here started being cautious pretty early probably because we never listened to Trump here.

      MORE – there’s evidence in Italy and almost every US state that an unexplained second wave of ILI (influenza like illness) happened at the tail end of our normal flu season. People tested negative for the flu but were still getting sick in December and January. This is when the outbreak here actually first started.

      Fresh air, sunlight, and spring time is also only going to help in the coming weeks.

      • 2
      • 0
      • 0 Deem this to be "Fake News"
      • heckler

        I’ll give you guys a little more. One funny thing about viruses is that they replicate by infecting the host and then they cause the host to do some behavior to spread the virus to new hosts. In this case cough. The virus multiplies in the back of your nose / upper throat and you cough it out and spread it to others. See those long q-tips like things they have to stick all the way back in your nose like Trump is always bitching about.

        You will not get infected by touching surfaces unless you immediately stick your finger in your nose afterwards. I think you can even stick your finger in you mouth and swallow and still be okay. This is a respiratory virus only, it will not grow in your stomach, your ear, or your ass hole. Respirator masks help a great deal and while handwashing is okay, the hysteria over sanitizer is pointless. Your skin is actually your best defense and the virus can only live on human skin for 5 minutes.

        • 2
        • 0
        • 0 Deem this to be "Fake News"
  6. numbersgame

    I needed this laugh:
    Fauci on Trump coronavirus comments:
    “I can’t jump in front of the microphone and push him down”

    I just picture in my mind him doign just that.

    • 0
    • 0
    • 0 Deem this to be "Fake News"
  7. monkeybot

    So wait – of the nearly 2000 passengers on the Princess Cruise ship – only 11 died?
    ~ .05%?
    That’s a pretty good statistical sample…

    • 1
    • 0
    • 0 Deem this to be "Fake News"
    • numbersgame

      It’s a great example, one I used 6 weeks ago. Here is the update;

      3711 crew+passengers
      712 cases: 19% infection rate with some late social distancing
      11 dead, **127 still sick**

      Death rate for infectees, TBD: 1.5% – 19%

      Death rate for population, TBD: 0.3% – 3.7%
      0.3% of the US population would be 10M dead

      Now if only 2000 died, that would be a population death rate of 0.0005%

      • 0
      • 0
      • 0 Deem this to be "Fake News"
      • monkeybot

        @numbersgame think the math is :
        11 ÷ 3711 = 0.03% death rate for population (TBD as *127* still sick)
        so “only” 1M dead (US)

        • 0
        • 0
        • 0 Deem this to be "Fake News"
        • numbersgame

          You can rough estimate numbers this way:
          1% = 1/100 = 37/3711 and
          11 = ~1/3 of 37
          so 11/3711 = ~1/3% = 0.3333%, so 0.3% sounds right

          In other words, this is NOT the flu.

          • 0
          • 0
          • 0 Deem this to be "Fake News"
  8. s.k.

    CFR goes up as medical resources become overwhelmed.

    • 1
    • 0
    • 0 Deem this to be "Fake News"
  9. heckler

    Sentiment-wise Coscto has announced they will no longer accept returns of toilet paper or sanitizer. For me this is an indication panic is dying down.

    • 2
    • 0
    • 0 Deem this to be "Fake News"
    • dragun

      Or that people realized the product will be available and there was no chance to sell at a premium to those who immediately did have it.

      • 2
      • 0
      • 0 Deem this to be "Fake News"