ES Journal Archive (2006 - 2008)
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WALL STREET CITY
WallStreetCity.com
Inside Wall Street Oct 22 1998 3:33PM CST
The Real Story Behind the Fed Ease
By Paul Lam
Senior Markets Writer
Contrary to what most would like to believe, the Federal Reserves
abrupt decision to cut interest rates on Oct.15 was not so much due to
concerns over a slowing economy or credit crunch. The action, which came
16 days after the first 0.25% rate cut, was outside the normal context
of a Federal Open Market Committee meeting, which does not convene again
until Nov. 17. It was a response to an immediate meltdown threat of the
banking system.
According to informed sources, the Fed had been injecting liquidity into
major banks even before the Oct. 15 ease. Federal Reserve repo tenders,
which are repurchases of Treasury securities held by banks in return for
short-term cash, a common way to add liquidity to the banking system,
rose by 35% during the two weeks prior to the surprise rate-cut.
The Oct. 15 ease, on top of the recent surge in liquidity available to
banks, reportedly came after urgent requests from the resident of the
Federal Reserve Bank of San Francisco, who told Federal Reserve chairman
Alan Greenspan of extraordinary demands by one member bank in its
region.
Reliable sources indicate that this demand for repo funds had been
provoked by a credit squeeze in the interbank market against Bank of
America (BAC:NYSE). Bankers believe that the bank's troubles are far
more serious than what is being
told to the public. Bank of America made a $357 million loss write-off
due to its participation in the troubled hedge fund D.E. Shaw, and
bought $20 billion in outstanding securities and derivatives contracts
from that hedge fund in order to
prevent its demise. The grave danger on Oct. 15 was of a breakdown in
the interbank payments system, which could have easily led to a global
systemic collapse.
While investors around the world rejoice the Feds action by
outrageously bidding up stock prices, the more alarming message is that
the emerging markets crisis has now fully reached the G7 financial
systems.
<old story but very similar in dynamics>
WallStreetCity.com
Inside Wall Street Oct 22 1998 3:33PM CST
The Real Story Behind the Fed Ease
By Paul Lam
Senior Markets Writer
Contrary to what most would like to believe, the Federal Reserves
abrupt decision to cut interest rates on Oct.15 was not so much due to
concerns over a slowing economy or credit crunch. The action, which came
16 days after the first 0.25% rate cut, was outside the normal context
of a Federal Open Market Committee meeting, which does not convene again
until Nov. 17. It was a response to an immediate meltdown threat of the
banking system.
According to informed sources, the Fed had been injecting liquidity into
major banks even before the Oct. 15 ease. Federal Reserve repo tenders,
which are repurchases of Treasury securities held by banks in return for
short-term cash, a common way to add liquidity to the banking system,
rose by 35% during the two weeks prior to the surprise rate-cut.
The Oct. 15 ease, on top of the recent surge in liquidity available to
banks, reportedly came after urgent requests from the resident of the
Federal Reserve Bank of San Francisco, who told Federal Reserve chairman
Alan Greenspan of extraordinary demands by one member bank in its
region.
Reliable sources indicate that this demand for repo funds had been
provoked by a credit squeeze in the interbank market against Bank of
America (BAC:NYSE). Bankers believe that the bank's troubles are far
more serious than what is being
told to the public. Bank of America made a $357 million loss write-off
due to its participation in the troubled hedge fund D.E. Shaw, and
bought $20 billion in outstanding securities and derivatives contracts
from that hedge fund in order to
prevent its demise. The grave danger on Oct. 15 was of a breakdown in
the interbank payments system, which could have easily led to a global
systemic collapse.
While investors around the world rejoice the Feds action by
outrageously bidding up stock prices, the more alarming message is that
the emerging markets crisis has now fully reached the G7 financial
systems.
<old story but very similar in dynamics>
thanks for the article spectre.
it's eerie how history repeats itself.
i haven't been trading a lot myself this week.
working on my method, because i realized that my last one was critically flawed.
good trading to all!
it's eerie how history repeats itself.
i haven't been trading a lot myself this week.
working on my method, because i realized that my last one was critically flawed.
good trading to all!
1482 retest.
1478 is equilibrium.
with the ponzi scheme in full gear...the fed pumpin presidents,the bulls have commenced their bloated pig dance thanks to the "anticipation" of a big juicy cut.they could take it to 1500/1508 as long as the printing/pumping continues.
the overnight hi is 83.75....so why not?....if they fall short,i`ll still be in that zone ....80/85... as a seller,with more to sell above but conservative.
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