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Re: Promises Of More QE Are No Longer Sufficient: Desperate Banks Demand Reserves, Get First Fed Repo In 4 Years

By: Decomposed in ROUND | Recommend this post (0)
Fri, 03 Aug 12 9:41 PM | 28 view(s)
Boardmark this board | De's Test Board 		Msg. 43066 of 45651
(This msg. is a reply to 43065 by capt_nemo)
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The subdued price of gold will break out before much longer. When it does, look for $2,000+.


In other words, $1,600 is a bargain. Time to buy.




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Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months


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The above is a reply to the following message:
Promises Of More QE Are No Longer Sufficient: Desperate Banks Demand Reserves, Get First Fed Repo In 4 Years
By: capt_nemo in ROUND
Fri, 03 Aug 12 8:32 PM 		Msg. 43065 of 45651

What happened today? Well, first, here is what happened yesterday. The WSJ explains:

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While endless jawboning and threats of more free (and even paid for those close to the discount window) money can do miracles for markets, if only for a day or two, by spooking every new incremental layer of shorts into covering, there is one problem with this strategy: the "flow" pathway is about to run out of purchasing power. Recall that Goldman finally admitted that when it comes to monetary policy, it really is all about the flow, just as we have been claiming for years. What does this mean - simple: the Fed needs to constantly infuse the financial system with new, unsterilized reserves in order to provide bank traders with the dry powder needed to ramp risk higher. Logically, this makes intuitive sense: if talking the market up was all that was needed, Ben would simply say he would like to see the Dow at 36,000 and leave it at that. That's great, but unless the Fed is the one doing the actual buying, those who wish to take advantage of the Fed's jawboning need to have access to reserves, which via Shadow banking conduits, i.e., repos, can be converted to fungible cash, which can then be used to ramp up ES, SPY and other risk aggregates (just like JPM was doing by selling IG9 and becoming the market in that axe). As it turns out, today we may have just hit the limit on how much banks can do without an actual injection of new reserves by the Fed. Read: a new unsterilized QE program.

First, here is a reminder of what has been going on in the secular amount of excess reserves as indicated by the Fed.

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http://www.zerohedge.com/news/promises-more-qe-are-no-longer-sufficient-desperate-banks-demand-reserves-get-first-fed-repo-4-?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29

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