Markets still falling like whoa

[52-80 19,377]

2 minutes ago, Coelenterate Fuccboi said:

she has stolen my dreams and my adulthood

[Muy Frio 182]

This is a good thread on a longer term hold I have that’s crypto based. Partnering with FB on their Diem cryptocurrency. Worth a look. 
 

 

[Wally Fairway 5,678]

Seeing more article about the looming correction; based on track record of those prognosticating it makes me want to buy some near/mid-term calls.

[Cheeseweasel 26,443]

3 minutes ago, Wally Fairway said:

looming correction

These people have been predicting it for 10 years. Eventually they'll get it right. But you'd have left so much money on the table if you'd bought into it then.

[Bone3421 716]

I don't know seems different this time, but who knows.

Reverse repo was over a trillion for 2nd time in a week; plus inflation numbers are over 5% for 3 months in a row. The last time that happened with inflation was 2008 before the housing market crash.

[washparkhorn 9,974]

8 minutes ago, Bone3421 said:

Reverse repo was over a trillion for 2nd time in a week

Debt ceiling looming. The reverse repo sets a floor for interest rates - to keep the bottom from falling out. Isn't it working as designed? https://www.msn.com/en-us/money/markets/us-fed-reverse-repo-volume-hits-record-241-trillion-as-debt-ceiling-looms/ar-AAMLtRI (Reuters story).

[Bone3421 716]

Debt ceiling looming. The reverse repo sets a floor for interest rates - to keep the bottom from falling out. Isn't it working as designed? https://www.msn.com/en-us/money/markets/us-fed-reverse-repo-volume-hits-record-241-trillion-as-debt-ceiling-looms/ar-AAMLtRI (Reuters story).

I don't know, I just know it's never been this high and we printed a bunch of $$$.

[washparkhorn 9,974]

16 minutes ago, Bone3421 said:

18 minutes ago, washparkhorn said:

Debt ceiling looming. The reverse repo sets a floor for interest rates - to keep the bottom from falling out. Isn't it working as designed? https://www.msn.com/en-us/money/markets/us-fed-reverse-repo-volume-hits-record-241-trillion-as-debt-ceiling-looms/ar-AAMLtRI (Reuters story).

I don't know, I just know it's never been this high and we printed a bunch of $$$.

Got it (and understand). Thanks. 

[bernorange 8,386]

Regarding the reverse repo market, I saw this the other day:

Quote

...
The situation originated in the spring 2020, when the Treasury Department issued $3 trillion in new debt to pay for the stimulus and bailout programs, and when the Fed bought $3 trillion in securities to monetize this new debt so that the market didn’t have to absorb it.

However, the government didn’t spend the $3 trillion it had raised, and the unspent amounts remained in the TGA, peaked at $1.8 trillion in July 2020, and by the end of the year was still at $1.6 trillion.

The purposeful drawdown of the TGA ends when the account reaches $500 billion, which is about now. Going forward, the account balance will fluctuate, as checking accounts do, but it should largely remain around $500 billion.

The $1.1 trillion tsunami of liquidity made its way from the TGA and the Fed’s books (where the TGA is a liability) into the financial system and caused all kinds of issues in the money markets where interest rates began to drop below 0% as all this cash was trying to find a place to go. Even 30-day Treasury bills were trading at 0% or below 0% by early June.

This is when the Fed started mopping up extra cash via its overnight “reverse repos” (RRP). At first, the Fed’s offering rate for overnight RRPs was 0% interest. On June 16, it raised the interest it is paying by five basis points to 0.05% (annualized rate). This triggered a flood of cash, mostly by money market funds, to be handed to the Fed via RRPs, and these RRPs have now been at around $1 trillion for over a month.

On Friday, the Fed sold $952 billion in overnight – well, through Monday morning – reverse repos to 68 counterparties. These counterparties have mostly been money market funds. In other words, they handed the Fed $952 billion in cash and obtained securities from the Fed for that amount, to earn an annual rate of 0.05% interest on that $952 billion.

Those reverse repos will mature and unwind Monday morning, and there will be new repos in a different amount that will unwind on Tuesday.

Reverse repos do the opposite of QE: They absorb cash as the Fed sells Treasury securities for cash, and removes that cash from the financial system. With RRPs fluctuating at around $1 trillion, the Fed has undone over eight months of QE, at $120 billion per month.

Another way of looking at the effects of the RRPs is that they have removed the $1 trillion in liquidity from the financial markets that the drawdown of the TGA has pumped into the financial markets.

Either way of looking at it, the RRPs have been a giant sucking sound of cash. One of the effects, with the offering rate of 0.05%, is that short-term interest rates have risen from 0% or below 0% in early June to around 0.05% now, including 30-day Treasury bills and the Secured Overnight Financing Rate (SOFR, the newfangled Libor replacement).

For money market funds, banks, and other financial institutions that handed the Fed this $1 trillion via RRPs, the 0.05% interest that the Fed pays them amounts to an interest income of $1.4 million per 24-hour period. Over the weekend, all together, they made about $4 million in interest income on the $952 billion in RRPs. If they do this for a whole year, it would amount to $500 million in risk-free interest income.

More (including graphs!):  https://wolfstreet.com/2021/08/07/1-1-trillion-flood-of-liquidity-from-drawdown-of-tga-peters-out/

[Cheeseweasel 26,443]

16 hours ago, Bone3421 said:

I don't know seems different this time, but who knows.

Reverse repo was over a trillion for 2nd time in a week; plus inflation numbers are over 5% for 3 months in a row. The last time that happened with inflation was 2008 before the housing market crash.

I look at it this way. There are a SHITLOAD of very wealthy and influential people in the markets. I'd rather be on the side that they are on than on the side of the people proclaiming gloom/doom and stuffing money in mason jars.

[Lobwedgephil 1,146]

11 hours ago, Cheeseweasel said:

I look at it this way. There are a SHITLOAD of very wealthy and influential people in the markets. I'd rather be on the side that they are on than on the side of the people proclaiming gloom/doom and stuffing money in mason jars.

How will you know when they go short? 

[52-80 19,377]

6 hours ago, Lobwedgephil said:

How will you know when they go short? 

When your 401k turns into a 200.5k

[Coelenterate Fuccboi 13,438]

4 minutes ago, 52-80 said:

When your 401k turns into a 200.5k

Got it! Go short when they go long! This pretty much mirrors my trading strategy, buy the rips, sell the dips.

[52-80 19,377]

RRP figures arent very meaningful, outside of shock value. 
They just broadly reflect the liquidity from QE. And when fed “tapers”, it is a relative term, which means they inject less, not none at all. 
The interest from RRP is measured in aggregate. And duration is literally 1 day. 
Banks’ appetite for lending is approximated by returns (or spread on return) longer duration bonds e.g. 5y treasury, 10y treasury (or 5s30s or whathaveyou)

So banks are still going to lend for f150s, boats, mortgages, because they make more money on that than other use of balance sheet. And by the way broad money is “created” directly by commercial banks’ lending, not by central bank actions. Theyre still gonna lend more, and they have the Reserve account to buffer it (=spike in cash withdrawal). 
 

basically, more money to go around for everyone. Except for my trading account. 

[ChiTownDoc 21,349]

On 8/12/2021 at 10:18 PM, Lobwedgephil said:

How will you know when they go short? 

Very very few influential and wealthy families go short, ever.  They don’t need money in the short term and just choose when to pile more money in.  They also can take cheap money out via loans vs pulling their own money to pay for things (why pay cap gains?).  Don’t be influenced by the few short sellers making a lot of noise - that’s not the play for America’s uber wealthy.  

[Wally Fairway 5,678]

another rough day in the market, well actually just at the open - shitshow in Afghanistan, rumors of Fed slowing stimulus, Covid uptick, inflation, real estate tempering, unemployment improvement slowing......ahhhh, no worries  record close (again) for the Dow & S&P, fuck it/floor it!

[52-80 19,377]

1 hour ago, Wally Fairway said:

another rough day in the market, well actually just at the open - shitshow in Afghanistan, rumors of Fed slowing stimulus, Covid uptick, inflation, real estate tempering, unemployment improvement slowing......ahhhh, no worries  record close (again) for the Dow & S&P, fuck it/floor it!

The markets will keep rocketing until morale improves. 

[Wally Fairway 5,678]

Today there is no bounce in that dead cat 

 

[washparkhorn 9,974]

Fed Minutes today:

(via Reuters)

Spoiler

Aug 18 (Reuters) - The bulk of the Federal Reserve’s policy-setting committee is coalescing around a plan that would see the U.S. central bank start trimming its bond-buying program later this year, and reduce purchases of Treasury securities and mortgage-backed securities (MBS) “proportionally” so they end at the same time.

Minutes from the Fed’s July 27-28 meeting, which were released on Wednesday, showed policymakers remained somewhat at odds over how fast to taper the asset purchases, with “many” of them keen on making sure bond-buying ends before interest rate hikes may need to begin, and “several” preferring a more gradual approach.

“The only thing that is now clearer than it was prior to the release of the Minutes is that the hawkish crowd that has publicly been calling for an ‘early and fast’ tapering does not represent the majority view,” Jefferies economists Thomas Simons and Aneta Markowska said in a research note after the release of the minutes.

Fed officials largely agreed there had been enough progress on inflation to meet the “substantial further progress” threshold needed before the central bank could reduce its monthly purchases, currently set at $80 billion of Treasuries and $40 billion of MBS. However, more improvement in the labor market is needed, they said.

“Most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year,” according to the minutes.

Some Fed policymakers have advocated for reducing the MBS purchases more quickly than those of the Treasuries out of concern they could be fueling an unsustainable boom in the housing market. But the minutes revealed there isn’t strong support for that approach.

“Most participants remarked that they saw benefits in reducing the pace of net purchases of Treasury securities and agency MBS proportionally in order to end both sets of purchases at the same time,” according to the readout. That plan is consistent with the understanding that both purchases have similar effects on broader financial conditions.

https://www.reuters.com/article/usa-fed-minutes-taper/fed-officials-expect-to-start-bond-buying-taper-this-year-minutes-show-idUSL1N2PP23D

[Wally Fairway 5,678]

On 8/17/2021 at 3:20 PM, Wally Fairway said:

Today there is no bounce in that dead cat 

 

 

18 minutes ago, washparkhorn said:

Fed Minutes today:

(via Reuters)

  Hide contents

Aug 18 (Reuters) - The bulk of the Federal Reserve’s policy-setting committee is coalescing around a plan that would see the U.S. central bank start trimming its bond-buying program later this year, and reduce purchases of Treasury securities and mortgage-backed securities (MBS) “proportionally” so they end at the same time.

Minutes from the Fed’s July 27-28 meeting, which were released on Wednesday, showed policymakers remained somewhat at odds over how fast to taper the asset purchases, with “many” of them keen on making sure bond-buying ends before interest rate hikes may need to begin, and “several” preferring a more gradual approach.

“The only thing that is now clearer than it was prior to the release of the Minutes is that the hawkish crowd that has publicly been calling for an ‘early and fast’ tapering does not represent the majority view,” Jefferies economists Thomas Simons and Aneta Markowska said in a research note after the release of the minutes.

Fed officials largely agreed there had been enough progress on inflation to meet the “substantial further progress” threshold needed before the central bank could reduce its monthly purchases, currently set at $80 billion of Treasuries and $40 billion of MBS. However, more improvement in the labor market is needed, they said.

“Most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year,” according to the minutes.

Some Fed policymakers have advocated for reducing the MBS purchases more quickly than those of the Treasuries out of concern they could be fueling an unsustainable boom in the housing market. But the minutes revealed there isn’t strong support for that approach.

“Most participants remarked that they saw benefits in reducing the pace of net purchases of Treasury securities and agency MBS proportionally in order to end both sets of purchases at the same time,” according to the readout. That plan is consistent with the understanding that both purchases have similar effects on broader financial conditions.

https://www.reuters.com/article/usa-fed-minutes-taper/fed-officials-expect-to-start-bond-buying-taper-this-year-minutes-show-idUSL1N2PP23D

so that is why my dead cat died again today

[washparkhorn 9,974]

21 minutes ago, washparkhorn said:

The only thing that is now clearer than it was prior to the release of the Minutes is that the hawkish crowd that has publicly been calling for an ‘early and fast’ tapering does not represent the majority view,” Jefferies economists Thomas Simons and Aneta Markowska said in a research note after the release of the minutes.

This is the key takeaway from the minutes.

This is not investment advice. 

[washparkhorn 9,974]

1 minute ago, Wally Fairway said:

so that is why my dead cat died again today

We have many in the markets addicted to the Fed Juice.

[Wally Fairway 5,678]

1 minute ago, washparkhorn said:

We have many in the markets addicted to the Fed Juice.

I'm thinking it's an overreaction, so I picked up some (more) SPY calls right at the close.
Telling y'all this so you are prepared for the inevitable drop for the next few days

[Wally Fairway 5,678]

16 hours ago, Wally Fairway said:

I'm thinking it's an overreaction, so I picked up some (more) SPY calls right at the close.
Telling y'all this so you are prepared for the inevitable drop for the next few days

[XYZ 2,154]

I see the headline “stocks plunge”, I look at the indices and SPY is down like 0.5%. What happened to market corrections?

[Incredulity 11,882]

52 minutes ago, XYZ said:

I see the headline “stocks plunge”, I look at the indices and SPY is down like 0.5%. What happened to market corrections?

[52-80 19,377]

1 hour ago, XYZ said:

I see the headline “stocks plunge”, I look at the indices and SPY is down like 0.5%. What happened to market corrections?

we only trade options now, so -0.5% on the underlying is like -69% to our positions

[52-80 19,377]

On 8/16/2021 at 11:23 PM, 52-80 said:

The markets will keep rocketing until morale improves. 

has morale improved yet?

[Cheeseweasel 26,443]

5 minutes ago, 52-80 said:

has morale improved yet?

[Wally Fairway 5,678]

20 minutes ago, 52-80 said:

has morale improved yet?

I'm waiting for tomorrow until I get excited about it (repeat this stmt again tomorrow ...... rinse, wash, repeat)

[Wally Fairway 5,678]

better question - opportunity to sell (to close) some of my call options OR let it ride, stocks only go up?

[52-80 19,377]

32 minutes ago, Wally Fairway said:

better question - opportunity to sell (to close) some of my call options OR let it ride, stocks only go up?

whatever your gut reaction is, do the opposite of that

[Sam Lin 3,606]

What if my gut reaction is to do the opposite of whatever Wally does?

[Wally Fairway 5,678]

All I can say is that the FDA full approval of the Pfizer vaccine was a real shot in the arm to my investments

[Coelenterate Fuccboi 13,438]

5 hours ago, Sam Lin said:

What if my gut reaction is to do the opposite of whatever Wally does?

Welcome to Surly Horns, Mr. Buffett.

Edited August 24, 2021 by Coelenterate Fuccboi

[Wally Fairway 5,678]

17 hours ago, Sam Lin said:

What if my gut reaction is to do the opposite of whatever Wally does?

I challenge you to a battle of wits

 

[52-80 19,377]

20 hours ago, Sam Lin said:

What if my gut reaction is to do the opposite of whatever Wally does?

Simultaneously long and short yourself to stay hedged

[Wally Fairway 5,678]

1 hour ago, 52-80 said:

Simultaneously long and short yourself to stay hedged

you say it like there is something wrong with that strategy - there have been times when I've owned both puts and calls on SPY, though there was a huge difference in the expiration dates (typically long-term calls and some short term puts - because I do such an awesome job of timing the market dips and jumps)

[52-80 19,377]

1 hour ago, Wally Fairway said:

you say it like there is something wrong with that strategy - there have been times when I've owned both puts and calls on SPY, though there was a huge difference in the expiration dates (typically long-term calls and some short term puts - because I do such an awesome job of timing the market dips and jumps)

long vega long gamma like a mawfucker

[OneOfTheOutOfFocusGuys 2,153]

WDAY to the moon

[Wally Fairway 5,678]

I'm taking a break from the call game, as I was able to sell of my late August SPY's at a profit; as I can't believe it can keep rising and prices have gone up. 
I'm not looking to get out, or to hedge (yet) - but damn, the market can't only go up forever (can it?)

[Cheeseweasel 26,443]

Just now, Wally Fairway said:

but damn, the market can't only go up forever (can it?)

[Queen Bitch 1,692]

Speaking of SPY, I've been wondering like a simpleton -- why not just put a huge chunk of money in it and leave it there? Is there a downside? All it does is go up.

[Cheeseweasel 26,443]

18 minutes ago, Queen Bitch said:

Speaking of SPY, I've been wondering like a simpleton -- why not just put a huge chunk of money in it and leave it there? Is there a downside? All it does is go up.

Holy shit you've cracked the code

[Queen Bitch 1,692]

Mockery aside, can someone -- not Cheese -- explain to me why that's a stupid strategy?

[Blotto 24,044]

1 hour ago, Queen Bitch said:

Speaking of SPY, I've been wondering like a simpleton -- why not just put a huge chunk of money in it and leave it there? Is there a downside? All it does is go up.

generally thats not a bad low effort approach to investing, and you will do better that way than most. but the idea of an index fund is to diversify and right now the weighting of SPY is fucked up top heavy .  almost 25% of the index is concentrated in 6 companies: 

That works great until it doesn't. If you're talking a huge chunk of money, just be sure you're comfortable with current profile of the SPY.  here's some historical context of that metric. note the previous spikes in 98 & 08. 

 

 

Not trying to talk you out of it, but if you're comfortable with the tech stock  concentration, you could also consider QQQ which outperforms SPY of late.

 

 

Edited September 1, 2021 by Blotto

[Cheeseweasel 26,443]

2 hours ago, Queen Bitch said:

Mockery aside, can someone -- not Cheese -- explain to me why that's a stupid strategy?

 

It's not a stupid strategy. Just not as predictable as the last 5 years have indicated. 

[Wally Fairway 5,678]

3 hours ago, Queen Bitch said:

Mockery aside, can someone -- not Cheese -- explain to me why that's a stupid strategy?

Don't ask me, I've only got about 65% of my portfolio in SPY 

[Incredulity 11,882]

6 hours ago, Blotto said:

generally thats not a bad low effort approach to investing, and you will do better that way than most. but the idea of an index fund is to diversify and right now the weighting of SPY is fucked up top heavy .  almost 25% of the index is concentrated in 6 companies: 

That works great until it doesn't. If you're talking a huge chunk of money, just be sure you're comfortable with current profile of the SPY.  here's some historical context of that metric. note the previous spikes in 98 & 08. 

 

 

Not trying to talk you out of it, but if you're comfortable with the tech stock  concentration, you could also consider QQQ which outperforms SPY of late.

 

 

Obviously, the explicit,”too concentrated” concern is amplified with QQQ vs SPY

[Blotto 24,044]

16 minutes ago, Incredulity said:

Obviously, the explicit,”too concentrated” concern is amplified with QQQ vs SPY

Indeed, its ridiculous these days.