Why is stock market unaffected by repo turmoil this week?

helpme_please said:
Fed's bailout of the repo money market for consecutive days look serious. Why isn't the stock market affected? I'm puzzled. Can the elitetraders here share their insights?

It seems like even the all-powerful Fed is losing control of its own interest rate that it is supposed to control. Looks serious to me.

https://www.cnbc.com/2019/09/18/fed...-big-decision-this-just-doesnt-look-good.html
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The last 10 years you could have written the same title just replaced “repo” with “x” turmoil.
The market has shrugged off everything since spring 2009.
This is what trillions of free money from the worlds central banks will do.
I’m sure this will end just fine. SMH
 
HobbyTrading said:
Why do you think that the stock markets should be affected? Apparently you see some sort of connection. Hopeful you can explain me what that connection is.
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Crisis in credit markets spreads to the stock markets. Financial contagion. This is nothing new at all. It happened in 2008 before.
 
helpme_please said:
Crisis in credit markets spreads to the stock markets. Financial contagion. This is nothing new at all. It happened in 2008 before.
More...
Apparently it does not seem to be a crisis this time, from the stock market's point of view. And thus is it not spreading.
 
helpme_please said:
Crisis in credit markets spreads to the stock markets. Financial contagion. This is nothing new at all. It happened in 2008 before.
More...

I was surprised too. The repo market is one of the most basic funding markets in the world. Perhaps the crisis was a blip (like how sometimes the SPX index rebalancing causes wild fluctuations when one party screws up their trades.
 
Specterx said:
Did the repo turmoil cause you to immediately convert your personal long-term investments to cash?

No? Then why should the market go down?
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No because I am not levered. But if a fund or a bank can’t repo their securities they will want to own less of them. And there are a lot of funds and banks that repo their securities.
 
Fed repo auction was 2x oversubscribed: large enough that it was newsworthy but I don't know how large that actually means. Banks are wanting cash for quarter end.

There is an article on Bloomberg about how that 100Bn is lent/borrowed at the fed funds market daily; but 1 Trillion is traded daily in the repo market.
 
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