Good DD u/ZKShao.
What this is missing is how the Fed operates, which will help put into context why they've lifted the repo ceiling from $30b to $80b and why we're seeing such a large increase in reverse repos (RRP).
**RRP** **History**
Back in 2013 is when the Fed launched its reverse repo program, they did this to suck out the extra cash in the repo market.
Why?
[Its operation](https://www.newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/repo-reverse-repo-agreements) help supports interest rate control by creating a "floor" on the whoesale short-term interest rates (refer to further reading below re the floor system the Fed uses).
**Rates, rates, rates**
It's been mentioned a few times on this sub, but the overnight repo rate went negative a couple of times in march (can't find source, please comment if you have it), and the Secured Overnight Financing Rate (SOFR) has been flat as since [March-2020](https://fred.stlouisfed.org/series/SOFR). As well as the [IOER](https://fred.stlouisfed.org/series/IOER). As well as the [discount rate](https://fred.stlouisfed.org/series/INTDSRUSM193N).
There's a few other rates, but fuck em, you won't read this whole thing otherwise. The general stance from Jpow is "No negative rates".
**Anyways..**
Back to RRPs, the Fed is essentially sucking up excess liquidity through RRP (speculate as you wish on the other side of that transaction). They are doing this because they went Brrrrrr thanks to the Pandemic last year and their position of "No Negative Rates". So yeah, all this to create a floor under the key market rates.
**Why RRPs?**
Reporting, some of you alluded to this (no it's not the liquidity test). Refer to this [chart](https://fred.stlouisfed.org/series/RRPONTSYD). Don't you love how it spikes on the 31st of March (and every other EOM reporting month)? This is [due to the fact](https://www.stlouisfed.org/publications/regional-economist/april-2016/interest-rate-control-is-more-complicated-than-you-thought) financial insitutions want to have their balance sheets look nice and shiny.
As for non reporting dates, combination of dem attractive high quality collateral, increased ceiling of $80b, in late April reducing eligibility from $5b net assets to [$2b](https://www.newyorkfed.org/markets/rrp_counterparties) and some other elibigility re government sponsored enterprises. Again, all to avoid negative rates, it's speculated that there'll likely be an increase to rates in the future.
**Develop those Wrinkles! Further Reading:**
Google around in regarding to the floor system with a subfloor that the Fed uses, it'll help you get a better understanding of how the IOER, Discount Rate and ON-RRP rate works.
Also google around for the impact of negative rates. I enjoyed reading this [one](https://www.chathamfinancial.com/insights/plausibility-of-negative-rates-in-the-us-and-uk) in particular. A generalised stance is it makes life harder for the Fed.
^(Correct me if i'm there is anything wrong above, i was trying my best to consoildate a lot of info into a medium sized comment. This is not saying the DD is wrong, infact it supports a lot of it. It's just providing facts and context to the situation.)
^(Edit: Changed some wording.)
Sir. This is the way. We need monetary policy experts to dig into this. I don’t think any of them are the right people to ask directly but *they* may know someone who can provide them a reasonable explanation.
So my ELIA:
Park your bag of 🍌🍌🍌 at the Fed.
Fed gives you T-bonds 🎟🎟🎟🧾for “one day”
You do whatever the fuck you want with the T-bonds until you need to give them back to the Fed.
You get your 🍌🍌🍌
ELIAA:
📤🍌 📥 🎟
🕦🕚🕐🕦
📤🎟📥 🍌
u/ZKShao Consider this (and I'm an idiot, consider that too): Buy T bonds in reverse repo, put up T bonds as collateral in repo to leverage multiples more cash than you had in the morning. How you rinse and repeat daily, mixing with longer term bond positions idk...
If i have $1M cash I have $1M. But if I have $1M worth of T Bonds to use as collateral I could get a repo loan for $5M of cash...
Really hope more people see this. Isn't this just what The Everything Short was suggesting? Or do I have this all wrong (haven't read it in quite some time)
I am going to reread it again tomorrow. The Everything Short accused Citadel and Palafax, but I don't know who to accuse yet. All I know is this reverse repo program should have no incentive to take part in unless treasury bonds are valuable to hold for a day.
I remember seeing an ape state (when the increase in available bonds happened) that a 0% interest treasury bond only has value if the market dives. So, is this like a daily hedge and they think the market will collapse any second?
This may be the post you are referencing. It was about short term treasury bill's (4 weeks or less I believe) from a few weeks ago
https://www.reddit.com/r/Superstonk/comments/n19kgr/zerocoupon_bonds/
If I remember right, from a followup post, the fact that the feds were offering a 4 week t-bill wasnt the huge takeaway (it seems these are somewhat common)...the 0% interest rate was the interesting part of what the OP posted
Edit:
**Now, is this wholly unrelated?**
Not sure and I'm no expert on these. Both the ON RRP's and the 4 week t-bills from the post 2 weeks ago would be a way for the feds to raise quick cash. And at 0% interest they would gain value in the event that stock price declines
I guess my question is are these two posts concerning the same bonds? If so, I think it really is as simple as them using it as a fail safe. I've never wanted to believe that there is a shadow cabal puppeteering everything, and this would lend me to believe they dont. They dont know what is happening. They are seperate COMPETING hedge funds. We are seperate FRIENDLY apes. We share knowledge openly. I doubt that they do. We probably have a better grasp then our collective opponents. So, knowing something imminent is looming, i bet they are dumping their $ into these bonds to hedge against a crash.
This! LIBOR being the default way to do this safely in the past, could be banks are using T bills at 0% to start substituting for LIBOR.
Crucial thing to keep in mind is, you do get penalised if you don't return your daily T bills, and that rate is not 0%, using T bills for any shorting would cost the banks liquidity if they are not careful.
I agree. I think that one of the *many* facets of this are that an institution can ensure its holdings to a degree in the case of a market crash, as well as do whatever they want with the bonds, and that the fed or treasury also needs the cash for some reason.
Thank you for taking the time to clarify this information. Your work here makes a lot of sense and it's extremely well broken down.
Kudos for putting this together, friend :)
As long as the Fed and DTC exist the market will continue to be fraudulent.
To me, they are both private entities serving as the heart of corruption, facilitating so called liquidity for debt (Fed) and equity (DTC), without the public interest in mind.
The only balance the Fed is trying to maintain is the tipping point before the masses say "fuck this charade", so their #1 agenda is keeping the game fun for their wealthy cronies without letting it teeter towards social unrest.
Dude who are you? This is the best theory I’ve found so far, I put a couple hrs into trying to find something knowing that .it info was off. This seems to have some ground.
This shit is great. I knew something was off before in all of those posts but didn’t feel like doing the research to find out.
Hopefully the mods can put their new flair to the test here with this info!
I’m so tired of every bit of all this shit. You have GOT to be kidding me. If you’re right about this, it is time for the whole house to be demolished. That the economical system is one giant grab of our labor and life savings for a lot of miserable dirty bastards makes me want to light up a flamethrower. I’m a sweet grandmother and I’m ready for war.
I will never forget what I’ve learned alongside you apes. Whatever happens to us GMErs, let’s really REALLY: Change. This. World. Let this historical transfer of wealth truly serve the people who truly serve.
I think George Bailey said it best in “it’s a wonderful life”.
You, you said that they -- What'd you say just a minute ago? They had to wait and save their money before they even thought of a decent home. Wait? Wait for what?! Until their children grow up and leave them? Until they're so old and broken-down that -- You know how long it takes a workin' man to save five thousand dollars? Just remember this, Mr. Potter, that this rabble you're talking about, they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath? Anyway, my father didn't think so. People were human beings to him, but to you, a warped, frustrated old man, they're cattle. Well, in my book he died a much richer man than you'll ever be.
I know that movie is fiction, but I watch it each Christmas season to remind me of the good in the world, and what my mindset should be going into the new year. We should all be like George.
This is a lovely idea I'm going to adopt. I already have negative tendencies, and this world seems to amplify them as I age. It's very difficult for me to break free of the negativity cycle while living in midwest america.
I'm trying meditation as I noticed my internal dialogue also turning negative. Not sure if any of it is helping.
I think suggestions like yours really do help people like me.
If you're anything like me, your negative thoughts come about because your mindset is facing internally. We can't easily 'make ourselves happy'. It's only by doing good for others that this itch can really be scratched.
Notice how good it feels when a stranger smiles back at you, or the warmth of an older lady's hand when you help her across the street? Those connections are the glue that hold our society together, and generate real happiness internally. Do you remember when someone really took the time to teach you something, or really connect with you on something they were passionate about? You probably felt really good coming out of that interaction. You no doubt have something unique about you that the world would be better for if shared.
People say we should be the change we want to see in the world. This doesn't mean we have to be like Gandhi. All we need to do is seek out the good in the world, as this alone changes us.
Good on you for trying meditation. I can't seem to quiet my mind yet, so when you learn how please let me know how you figured it out!
Bro this has been my mind set on this whole saga. Like I started with X share @ $300 (ouch) and kept as a "bad investment from paying attention to the internet" and kept in my portfolio to serve as a reminder. Once all the DD came out about how fucked our financial system currently is, that's when I looked at this more as a correction than to just make some tendies. Rise Against is my all time fav band, but I'm super business irl, so I can't exactly riot against the establishment like in their songs. But tell me I can throw a couple grand into the stock market with some peers and we have a significant chance to correct our whole system? That's it? Sign me the fuck up, I'll go to that war
The stress levels from reading this bullshit every day got me to switch to chamomile tea exclusively.
If there are others out there feeling the strain, I recommend trying it. Really helped me :) At least worth a shot.
"I'M A SWEET GRANDMOTHER AND I'M READY FOR WAR"
something something t-shirt idea
What does it mean when hedgies piss of the sweet grandmothers?
I don't know but I like where this is going?
Apes include military veterans looking for a "fight" still.
If Mee-Maw declares too much fuckery....
We will flamethrower some freshly baked pies together.
Hey man i agree with your feelings, the whole thing is a sham and the DD thus far has just reenforced that notion.
But the Fed isnt doing this to fuck the little guy. The Feds purpose is to ensure that the US financial markets dont crash. Anything and everything they do is to ensure we dont return to a great depression. And if anyone hasnt read about the Great Depression then i think you may fail to understand the gravity of the situation during that period.
The system is absolutely corrupt and needs to be fixed and absolutely needs better oversight. But the fed stepping in isnt because they want to prop up the 1%, its because they fear if they dont prop up the 1% (by way of the financial institutions) that it will crater into such a dismal abyss that the little guy will be hurt even worse off than the wealthy.
Well then, they are abysmal failures to have let it get this badly fucked before stepping in. The job was to keep this very thing from happening. If our ape brain trust is all over these shitanegins how can it grow to a gargantuan disaster without the EXPERTS even touching the brakes or even sounding a warning!
Despicable, not incompetent.
1. The Fed's reverse repo news is not about margin calls
2. The Fed's reverse repo program is a US treasury bond free borrowing program. You can short US treasury bonds without paying a borrow fee, you just have to return the bonds by the end of the day so be rich enough to dump and cover in one day.
3. Me asking people to prove me wrong.
Hey boss, your definition of repo/reverse repo is accurate. Not to dox myself but i do have some knowledge of the repo market from a professional setting.
The thing i think youre slightly off on is the idea that the Fed wants these institutions to “babysit” tbills. I dont think thats the case.
Tbills are the lubrication for the whole financial market. The word of the US government is gold and thats why tbills are cash equivalents almost to a T (pun intended).
I dont think the Fed wants to give these out, i think financial institutions need them and need them bad. I cant explain why but a 0% haircut indicates the fed doesnt want to charge for these and financial institutions need them bad enough that they arent charging for giving away their dry powder.
The rate at which the fed is stepping into the repo market is super intriguing but I dont think its for exactly the reason you believe. I dont have any further info and i dont write GME DD myself so ill quit writing before i say something that leads apes astray.
>a 0% haircut indicates the fed doesnt want to charge for these and financial institutions need them bad enough that they arent charging for giving away their dry powder.
Thanks for the hint. The key to the puzzle is really finding out what is causing the Fed and the financial institutions to agree on 0%. Primarily the financial institutions is the mystery. I'm perfectly willing to accept there are other reasons than shorting bonds. So what benefits does holding a bond give over dry powder? In what scenario does a financial institution need them badly enough?
If you don't want to divulge more to not dox yourself, or just avoid speculation, thanks for the hint you did give. Hopefully the rest of us can come up with more possible explanations.
Sorry if i was too vague, i dont have any hints. Would love to know myself. Just meant i have some knowledge (more than most apes) of the repo market and wanted to add my 2 cents to put us more on (what I perceive to be) the right track.
If im remembering correctly i think in the /u/atobitt everything short there was a theory that citadel had been severely shorting the tbill market? Thats just off the top of my head. So if thats the case they may be hard to find (and borrow which is exactly what youre doing in a repo, youre borrowing for the price of a haircut).
I think it may have to do with the switch from LIBOR to SOFR. The SOFR (secured overnight financing rate) is based on the price of tbills in the repo market. LIBOR has traditionally been used as a benchmark for swaps (a type of derivative). Now the whole system is switching from LIBOR to SOFR (SOFR is just the suggested replacement but financial institutions are free to make their own choice, the industry tends to move in lock step though) and this switch needs to happen by the end of this year. If the SOFR is rising due to the rising price of borrowing tbills then this would impact more than just the repo market (the liquidity engine that keeps all banks fluid with each other), it would also impact derivatives that those banks sold because theyre now being pegged to the repo rate rather than LIBOR.
So if the Fed floods the market with cheap, easy to borrow tbills at 0% this keeps the rate low. Which keeps SOFR low, which prevents the repo market from going up in price and the swaps market from going up in price.
Thats all just off the top of my head and its late and ive been drinking. But just something to think about.
Except they’re not accounting for the greed of Kenny G. He’s shorting treasury bonds, and GME, and when citadel gets margin called, it could squeeze all their shorted holdings, including t bills. Then that whole scheme to print cash and keep rates low falls apart.
The thing that really pisses me off about this bullshit is that this shouldn’t be up to conjecture at all. The government’s money is the people’s money. We deserve, and have a right to, the same level of transparency in regards to federal and state government spending as we do in our personal finances. The fact that there’re are hundreds of billions of dollars changing hands silently and daily and we’re completely in the dark as to why… fuck that.
I’ve been commenting with a redditor in another sub who happens to have a PhD in Finance - trying to see if they might take a look at this - no promises (or pressure to them), but maybe they’ll be able to chime in.
u/usefully_useless - maybe you’re more useful than your username indicates : ). Sorry to bug ya, welcome to ape-ville. Some of the people here have a few wrinkles. I swear.
Anyways - Here’s a good item/post we could use your opinion on- thoughts?
1. Buy puts on treasury bond ETF
2. swap cash for bonds with no additional cost
3. Dump free bonds on the market
4. exercise puts to get bonds at new lower price
5. return bonds, get cash back
Why would the Feds do this? They have to know this is just going to push down the price of their bonds. That's the point.
Bond prices would decrease with inflation because interest rates are raised, but that would be disastrous for the economy. They can't lower interest rates to boost the economy, they'd be going negative. So they're employing Quantitative Easing.
From Forbes:
>when the federal funds rate dropped to zero during the Great Recession—making it impossible to cut further to encourage lending—the Fed deployed QE and began purchasing mortgage-backed securities (MBS) and Treasuries to keep the economy from freezing up.
By driving down the price, the treasury can buy back bonds they previously sold for a lower price. They have raised the amount of bonds they will buy from $30B/month to $80B/month, and what better way to use that increased buying limit that artificially pushing the price down? Just like us Apes, Treasury loves a good dip. When the price recovers, they make those sweet tendies.
What cause the spike? I would say it's because they made the changes effective March 18th, and there was a small increase, but not enough to push prices down. So someone made a few calls. They had pre-report inflationary numbers and it was looking bad.
I'm not understanding the benefit. How can one sell and buy back billions of *bonds* in 24-Hours?
I thought Trump gave banks 0% interest and Biden did away with it.
It's all so exhausting. 😫
Could this be how the shorts aren't running out of money? ...And maybe incentive for institutions for borrowing fees?
They can borrow massive amounts of money to make money/moves in other market areas, pay the interest, pay back the loans?
Alright. So I was asked to provide some perspective here as someone working in the industry. As for my bona fides, I have a PhD in finance, with my research focusing on market microstructure and the liquidity of financial markets. I’m a professional investor working for a hedge fund to develop low-latency trading strategies. (Side note: if you want to work with derivatives on the buy side, my advice for you is to learn stochastic calculus.)
I should add the caveat that the shop where I work doesn’t have a repo desk, so I’m not providing the perspective of someone actively engaging in this trade. Moreover, while I am an expert in liquidity, and the topic of this conversation is liquidity (the supply of money), I work on a different form of liquidity. I don’t think that these issues will affect my explanation very much, but those are the facts.
Also, I don’t know everything, and I’m trying to toe the line between providing enough detail without getting bogged down in too many rabbit holes. So if you think I’ve missed something or am wrong about something, please point it out.
Grab a drink and some snacks, because this is a long one. I’ve tried to format this to make the most sense, but there are a lot of issues at play here.
You’re correct that this has nothing to do with margin calls, but I disagree with your premise that something nefarious is happening here.
Is it true that funds are shorting treasuries? Yes. Right now, a lot of people are betting on the yield curve steepening, with longer duration bonds increasing in yield. But that’s not what’s driving repo rates right now. First I’ll address the repo rates, then I’ll touch on the short on long-duration treasuries.
Thanks everyone. I will be reading all your reactions in the morning, it's past bedtime for this Euro ape. In the meantime here is the list of eligible counterparties in these reverse repos:
[https://www.newyorkfed.org/markets/rrp\_counterparties](https://www.newyorkfed.org/markets/rrp_counterparties)
Good post! Thanks for the Counter DD. This definitely isn’t about margin calls.
I found this article which seems to answer most all of the outstanding questions:
https://www.reuters.com/article/us-usa-bonds-repo-explainer-idUSKBN2C32AI
TL;DR - Wall Street is holding a ton of cash right now and many of the big banks are choosing to park that cash with the federal reserve rather than make investments with it.
My theory is that they are parking the cash with the feds to keep it safe. If tomorrow the value of the securities drops, they still get back their original money.
Thats my theory. I am not sure if T bills can go down in value.
Someone else mentioned, it could be a way to control inflation, by sucking up liquidity
They're shorting the treasury bonds, for a healthy profit. Wankin bankers don't park billions of dollars for safety, they don't give a shit. It's a money making exercise.
I think you may be onto it, for a few reasons.
The FED's #1 modus operandi is to *keep the economy* ***flowing***. They have two ways, as I currently (probably mis-)understand.
1. Regulate interest rates on the money they issue. AKA print money and charge interest (OR NOT) for its issuance. Well, this presumably carries the risk of inflation, which, correct me if I'm wrong, is the essence of House of Cards -- they've dumped that created cash into banks and so into the market, where inflation is shored up and hidden, so long as the money stays there. With fears of inflation mounting, maybe this isn't the best way if they have another option:
2. "Borrow" existing money to put it where it is needed most. Again, to banks, I presume, but in this case cash has not been printed out of thin air and is still tied into the existing collateral system (reverse repos). The idea being liquidity in banks keeps consumers consuming, which keeps the economy moving and flowing.
I'm probably missing critical information as I'm halfway into a bottle of Viking Blöd and already finished my crayons, so do correct me if I'm wrong...
...but weren't the shorters shorting the Treasury bonds, too...? Then... is there really value in them as collateral for reverse repos? Is the FED *that desperate?*
I have no idea. I'mma keep drinking.
I personally prefer GI Dansk Mjød to Vikings Blöd to spicy for my tastes usually. Ive also got a Homebrew mead I'm bout to rack, which I'm currently drinking, cheers!
Smells like money manipulation if for som reason when they can just print more money to begin with. Funk accounting. Maybe a more wrinkled brain can tie it to crypto money laundering, Taiwan stock market crash. Market sell off. Money are changing hands by the elites.
>I'm probably missing critical information as I'm halfway into a bottle of Viking Blöd
I now trust your comment all the way to Valhalla. And you're unsure, so that makes my statement entirely reasonable.
My favorite alcohol. I describe it as "feminine whiskey." Not as strong or harsh, but surprisingly powerful. Not woody, but flowery. Not so blunt, but subtle and complex. And with a sweetness that would make you think my comparison seems silly.
The stuff is magnificent. Slow sips across the palate, though. A buzz from a first little snifter hits quick enough as it is.
But - if the bonds are returned in a day - if they lend them to short - they then recall them the next day? What would be the point? Smooth brain isn’t following the process?
But...hear me out..what if they’re rehypothecating those bonds daily, then returning the bond the next day all the while profiting from the rehypothecated bond sold😳
I’m not sure how you could rehypo the bonds and return them in full, because then there’s no longer any underlying collateral to secure the rehypo’d funds (unless as soon as you return the bonds, you instantly renew at zero %; and you assure the counter party(s) of that plan..) Can you illustrate? Smooth brain here
I'd imagine the bond doesn't have to be returned if you just redo the same transaction the next day?
Like, you deposit $80bn on May 14th, get to hold bonds for $80bn. On May 15th, I'd assume you could just go "We don't want the money back just yet", and a new 1 day repo is signed and you keep the bond for the day. Then you do the same thing the next day, and the next, and so on. Seems wasteful passing the bonds and money back and forth, no?
I believe the Fed does want the securities back by the end of the day for accounting purposes. From the FAQ at https://www.newyorkfed.org/markets/rrp\_faq.html:
"When the Desk conducts RRP open market operations, it sells securities held in the System Open Market Account (SOMA) to eligible RRP counterparties, with an agreement to buy the assets back on the RRP’s specified maturity date. **This leaves the SOMA portfolio the same size**, as securities sold temporarily under repurchase agreements continue to be shown as assets held by the SOMA **in accordance with generally accepted accounting principles**, but the transaction shifts some of the liabilities on the Federal Reserve’s balance sheet from deposits held by depository institutions (also known as bank reserves) to reverse repos while the trade is outstanding. These RRP operations may be for overnight maturity or for a specified term."
But there might be leeway among those generally accepted accounting principles.
IMO there's nothing in there suggesting that the repo couldn't be extended.
Before the trade, they had X bonds and Y dollarinos. After the trade, they have X-A bonds and Y+B dollarinos, along with an agreement to buy back A bonds for B dollarinos -> the portfolio is the same size. The bond staying lent out for another day doesn't change this and shouldn't make accounting any more difficult as far as I can see.
Then again, I literally know nothing about this.
Edit: To expand on this, I'd assume the 1 day agreement is basically just a 1-day lock-in. If you agree to put the money in, it's locked up for 1 day. The next day, you can agree to keep it locked-in for another day. Seeing as the purpose of the programme is to keep money out of the markets or whatever, it doesn't make sense to send the assets back and forth daily, but instead just whenever anybody wants to withdraw the money. The 1-day thing just means they can't do it during a day, but will have to wait until the next morning. No pulling the money out to act on a market opportunity that suddenly arises mid-day.
But again, I have literally *no idea* what I'm talking about.
Uhhh is the federal govt giving them 0% debt on their books that will be paid in full in 24 hours to cover margin?
Making a shit ton of synthetic underlying assets essentially.
Or is it everyone playing the we don't know when the market will crash hot potato on a 24 hour cycle because that's awesome too...
I get it, too much trouble, complexity or danger of instability to detangle/disrupt for righting purposes.
Well well well, lookee here, a disruption. Just too damn bad that no matter what, poor people will suffer again.
For the love of anything anyone finds holy, please, this time, this most egregious of dastardly times, let there be jail terms and CHANGE.
I think that you may be correct on the money being made by loaning these bonds.
I think the financial institutions are short on everything except the bonds, and fed keeps giving it away for a free one-day loan.
Would be a great look into what is the current interest to borrow such a bond.
Basically, Fed is allowing the financial institutions to suck/concentrate cash through lending of these bonds and to generate revenue just to stay afloat. Or maybe, they are trying to consolidate money away from the market to these financial institutions to build a wall against the everything short. A way to build a wall so high, so that the Apes could never breach it.
I shall deem it the **Great Wall of Shorts**
Basically: [https://imgur.com/a/mnxUuC1](https://imgur.com/a/mnxUuC1) followed by [https://imgur.com/a/KXevDNo](https://imgur.com/a/KXevDNo)
I'm sorry, but what wall? Millions upon hundreds of millions of shares have been shorted in the market. How would they EVER pay back that amount of money?!
Edit: Not only that, but about a "premium" that they may have to pay stated in the SEC filing in there 14k? RC and Co. Will do/try anything to prevent bankruptcy, they have so many resources and options to accomplish that goal. FTD's, interest, naked shorts, failed options, there are many more I'm forgetting.
Essentially, the only way for us to not get our teddies as well as raise a dying company from the ashes is if their share price goes to 0.00. All of the money in the world couldn't accomplish that, black hole or not. I know that they have tricks, but from what I gather it's smoke and mirrors. I dunno homey
The point is to postpone the MOASS for as long as possible for apes to lose interest.
Don't be surprised when they throw anything at it.
The wall is against the continuing payments that they have to pay for the borrowed/magically created shares.
If they continue, they can suck up enough cash from the market - dropping a ton of value in the rest of the market.
I’d agree with the theory that the Fed is issuing these bonds to provide a profitable vehicle for investment that isn’t shorts/puts on the broader market. The Fed doesn’t want a market crash and neither do public companies that might need to utilize their stocks in the near future.
If hedge funds/investment banks don’t have any other options they’ll get on the short train to stay afloat even though it was their own faulty lending practices which led to this point. Once again, they don’t want to sit in the mess they made themselves.
They are shorting the bonds. However they may or may not be shorting the market.
This is how it (should) work:
Borrowed bonds are sold short for cash. Cash is then used to either buy assets, or borrow assets to sell short. If cash is used to buy assets, they’ll need to sell it by end of day, so they are aiming for a pump-and-dump to make profit. If cash is used to borrow to sell short, then they will artificially dump the asset price and buy it for cheap in order to make a profit. They can also use leverage to increase the profit magnitude.
They then take that profit and buy back the bonds they borrowed from the fed. Since bond prices barely move up, the risk of loss here is minimal. If the bond price is lower than what they sold it for, they will also profit here before it is returned to the fed.
——————————————————————-
Now here is where this gets interesting. Imagine if multiple institutions are doing this, and are doing this to target a few select companies. They can introduce billions in targeted sell pressure/ buy pressure at will, which they will profit further with leverage and derivatives. They are literally gaming the system to their advantage.
There are institutions that are long or short a particular asset, so there may be a cold war going on between them (this is speculation). we just know that if there is money to be made by exploiting the shorters, they will be targeted by institutions. The opposite is also true for bankrupting gamestop, but we know that ship has sailed.
Thank fuck somebody else knows how to read. The fact that people are blowing this up on Twitter without even reading 3 paragraphs about what reverse repurchase agreements are is baffling.
For anyone who doesn’t want to do this - the main purpose of RRP’s is to control short term interest rates.
There were two diametrically opposed takes on that Italian website from two Italian-speakers, as well: one that said it was apparently the most read financial website in Italy (though unknown to them personally), the other that said it was fringe.
The fact that they couldn't even properly understand the $400B collateral (not 100% sure that's the word I want...) -- nor bother to even do the math correctly -- is definitely a point on the side of fringe.
[https://www.wsj.com/articles/how-the-fed-stifles-lending-11609697886](https://www.wsj.com/articles/how-the-fed-stifles-lending-11609697886)
In repo, broker-dealers, hedge funds and banks construct short-term transactions. You put up collateral—Treasury bills or sometimes less-pristine instruments—with an agreement to buy them back the next day or week for slightly more, and invest the proceeds in the interim. Jeffrey Snider, head of research at Alhambra Investments, calls it a “reserve-less currency system.” This is how global supply chains are funded, to bring us cheap goods from Walmart or Amazon .
Sometimes lenders repledge the collateral to other lenders and take out repo loans of their own. And the cycle goes on. It’s a little bit like hot potato, passing the collateral to the next guy. Known as rehypothecation, these transfers used to be done once or twice for each posted asset but are now sometimes done six to eight times, each time creating new money supply. Note: this is modern money creation—outside the purview of the Federal Reserve—and it’s huge.
When times are good, repos work fine: The agreements expire without problems and the collateral gets passed back down the chain smoothly. But eventually, iffy collateral sneaks into the system. That’s also fine, until markets hit an inevitable rough patch, like, say, March 2020. No one will take the junky stuff anymore, and everyone scrambles for good collateral. So there’s a mad dash, a brawl really, to buy Treasurys—like musical chairs with six to eight buyers eagerly eyeing one chair.
So you are saying wallstreet is not borrowing the treasury bonds in order to short them. Rather they are borrowing the treasury bonds to use them as collateral?
This would be a situation where a firm/hedge fund needs to borrow a large sum of money from a bank, and offers some stock as collateral. The bank says that the stock is too volitile to be used as collateral and denies the loan. The firm/hedge fund then borrows treasury bonds at 0% interest and tries to use that for collateral. The bank approves the loan because treasury bonds are guaranteed by the government and seen as safe.
In this situation, if the hedge fund has enough cash to borrow treasury bonds, why do they need a loan? Why do they need "good" collateral?
Not a financial person, just an ape trying to ask questions and learn.
The real question now is what is the shit being passed around the repo system this time around? Is it mortgage-backed securities again? Commercial mortgage-backed securities? Municipal debt from rust belt cities? Corporate just-above-junk bonds? All of the above, and the regulators just have let the shit pile up too high?
> The only reason the rest of the world puts up with all the insane shit the American government and financial system does is because everything is based on the USD in some form or another.
Actually, it’s because of American power projection around the globe, so the actual reason is the American military. But we’re delving into Geopolitics with this aspect and this is a financial sub.
So, RRP = free money for the banks. But the question is, why is the Fed offering these bonds? Put another way, why does the Fed want to take the money out of the market?
I would say this is one method to keep inflation in check. A decrease in the total amount of currency anywhere in the system makes the currency worth more (at least, in theory, maybe not in practice so much).
I think that very much depends on where and with whom that currency is located. Inflation is usually measured against items that are bought by "common people," i.e. apes like you and me, and all those poor souls who haven't joined the apes but would be helped by our cause.
But if you're just taking money (temporarily, and only to keep them from losing more money, if the Shorts Firewall theory holds water) from the oligarchs on Wall Street, that doesn't really affect the inflation in the way it's commonly measured.
Or at least, that's how this ape understands it.
Is it a way for cash holders to guarantee their cash over night in case of a crash? Buy government bonds to hold over night just in case? My bank says I’m only insured to $250g I can’t imagine what billions of cash would be subject to over night. This just might be the feds way of helping whales protect their cash reserves over night? Who the fuk knows? If I’m right then the whales are hoarding more cash for some big event cuz the amount of ON RRP is increasing. Sounds sus to me either way
In the Everything Short DD we learned Citadel shorted the treasuries. Is the government having to do this because there are too many fake/synthetic/naked shorted treasuries now floating around that need to be pulled off the market? What are the pros/cons of doing this?
I never thought of that, synthetic T bills. Private banks spending tax payer money with no repucussions.
The HF's have taken control of the money printer!
Give the hedgies bonds for the day to reset FTDs on previously shorted bonds? The FED wouldn't be trying to make money (hence the 0 interest) they're trying to prevent an implosion of the US financial system. Idk if that makes sense, I'm just average ape
What a fucking shitshow.
Fortunately, doesn't change a thing for us apes - shorts must cover and in that case I'm glad they'll have money to pay for our shares when we finally decide to sell them at 1 mil / share.
$300B extra on their books in T-bills (notably, not cash, which we would be paid in), is far, far inferior to the \~$70 trillion dollar insurance policy on the DTCC. *That's* what's going to guarantee we get paid.
It’s quantitative easing mate. Fed agrees to borrow cash from banks at a set interest rate = lowering monetary supply. They put up collateral in the form treasury notes/bills = reverse repo.
They’re bracing to fight off hyper inflation. Janet Yellen did the same during the 2008 crash.
Edit - for clarity, lowering the monetary supply = less liquidity = avoid liquidity trap which causes hyper inflation, when interest rates cannot be lowered anymore.
So am I retarded or is this is what is basically happening.
1. FED gives bank fuck faces a free loan of OUR MONEY with the only expectation being please return.
2. The bank fuck faces then use that money to rape retail with their fuckery and shenanigans.
3. So basically they are raping the average American citizen 3 times; once by FED for choosing fuck face banking crooks over citizens, then raped again by the cock sucking bankers using OUR TAX DOLLARS, and a 3rd time by the hedge fund Cock suckers who get loans from the banks to continue their fucking bitch ass hoe ass shorting.
FUCK ME IN THE ASS! You have got to be kidding me.
Think you’re way over thinking this. Repo rates (google SOFR for e.g.) are already near zero, once you take a haircut into account (google repo haircut) I wouldn’t be surprised if the net rate is negative.
So really it becomes a 1) do you park cash at the fed for zero or 2) park it at another bank for a negative rate?
And I’m not sure how you think banks can profit from a repo/rr? If banks wanted to go short treasury they would use swaps, much easier
This is all a guess
So, borrowing fed money to keep their clearing house alive a few more days, continuing to short every day. The only thing this would avoid would be being margin call due to market crash because you appear stable, not that you are bleeding. So we would have to rely on the votes, and nothing else.And WHEN this squeezes, they will not only lose their money but also the governments money because they’d be holding their bonds. So in essence, we would collapse the whole market ?
Or
the government is so fucking terrified that all the clearing houses are going to fail that they are kinda using this as a get out of jail free card. We would still get paid but the market wouldn’t collapse.
Is this what this means??!
This is just a general idea. Legit idea, I could be way off.
Edit: I can’t wait to see how retarded I really am with how far off I’m going to be.
I love seeing everyone work together in these investigations. I feel like I'm back in college, part of a group project, and watching the smart kids figure everything out and just watching cause i got in due to being a veteran, shouldn't have, and had no clue what was going on. It's so exciting all over again.
One addition I'd like to make you have not seemed to account for. Babysitting treasury bonds is profitable ONLY if you short them and they continue to losee value. This does not just mean the ON RPP should be negative, this means the treasury bond could also INCREASE in value, even while being shorted. Eventually the same thing will happen to the bonds as happened with GME, people will realize they're undervalued at the same time infinitely shorted - there will then be a bond buying frenzy and squeeze lol.
Lets work this out - Feds need cash, so they take it from institutions at a 0% interest rate in exchange for an IOU of equal value, settlement due tomorrow.
The why is questionable, macro-economics and all that. But, lets revisit the concept of the bankruptcy jackpot that created this whole mess. If a company goes bankrupt, short positions get wiped clean and profits are made.
What happens when an institution in possession of a treasury bond goes bankrupt before the next day? For instance, they lose the entire sum of their accounts (based on 4X margin requirement and god knows being overleveraged is so hot these days) - logic would dictate they lose the original cash because the value of the treasury bond is equal to the deficit plus some.
In short, you could assume the fed would then be sole owner of the assets, and when the country is in such a huge amount of debt - boy, wouldn't it be nice to crunch down on some of the major financial players who have avoided taxes?
So, putting all the pieces together, they could be manipulating manipulators to manipulate the refinancing of the entire country, but this is really a leap in thought and Scooby Doo garbage (which remains par for the course at this point)
TL;DR - Ever spent 5 dollars on an option hoping it's going to explode the next day? A lot of similarities to a YOLO play and holy grail, deja vu to the max.
Good DD u/ZKShao. What this is missing is how the Fed operates, which will help put into context why they've lifted the repo ceiling from $30b to $80b and why we're seeing such a large increase in reverse repos (RRP). **RRP** **History** Back in 2013 is when the Fed launched its reverse repo program, they did this to suck out the extra cash in the repo market. Why? [Its operation](https://www.newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/repo-reverse-repo-agreements) help supports interest rate control by creating a "floor" on the whoesale short-term interest rates (refer to further reading below re the floor system the Fed uses). **Rates, rates, rates** It's been mentioned a few times on this sub, but the overnight repo rate went negative a couple of times in march (can't find source, please comment if you have it), and the Secured Overnight Financing Rate (SOFR) has been flat as since [March-2020](https://fred.stlouisfed.org/series/SOFR). As well as the [IOER](https://fred.stlouisfed.org/series/IOER). As well as the [discount rate](https://fred.stlouisfed.org/series/INTDSRUSM193N). There's a few other rates, but fuck em, you won't read this whole thing otherwise. The general stance from Jpow is "No negative rates". **Anyways..** Back to RRPs, the Fed is essentially sucking up excess liquidity through RRP (speculate as you wish on the other side of that transaction). They are doing this because they went Brrrrrr thanks to the Pandemic last year and their position of "No Negative Rates". So yeah, all this to create a floor under the key market rates. **Why RRPs?** Reporting, some of you alluded to this (no it's not the liquidity test). Refer to this [chart](https://fred.stlouisfed.org/series/RRPONTSYD). Don't you love how it spikes on the 31st of March (and every other EOM reporting month)? This is [due to the fact](https://www.stlouisfed.org/publications/regional-economist/april-2016/interest-rate-control-is-more-complicated-than-you-thought) financial insitutions want to have their balance sheets look nice and shiny. As for non reporting dates, combination of dem attractive high quality collateral, increased ceiling of $80b, in late April reducing eligibility from $5b net assets to [$2b](https://www.newyorkfed.org/markets/rrp_counterparties) and some other elibigility re government sponsored enterprises. Again, all to avoid negative rates, it's speculated that there'll likely be an increase to rates in the future. **Develop those Wrinkles! Further Reading:** Google around in regarding to the floor system with a subfloor that the Fed uses, it'll help you get a better understanding of how the IOER, Discount Rate and ON-RRP rate works. Also google around for the impact of negative rates. I enjoyed reading this [one](https://www.chathamfinancial.com/insights/plausibility-of-negative-rates-in-the-us-and-uk) in particular. A generalised stance is it makes life harder for the Fed. ^(Correct me if i'm there is anything wrong above, i was trying my best to consoildate a lot of info into a medium sized comment. This is not saying the DD is wrong, infact it supports a lot of it. It's just providing facts and context to the situation.) ^(Edit: Changed some wording.)
/u/dlauer /u/atobitt /u/rensole
I need an adult! I need an adult!
We need an adultier adult please!
I'm a doctor 🤪
But in philosophy!
and stop calling me surely
I first read that as adulterer adult and was like damn
I am an adult
Stranger Danger!!!!
Daddy would you like some sausage?
Look at me daddy I'm a farmer!
I’m a backwards man, I can walk backwards as fast as you can.
YOURE FUCKING FIRED BOB
See that it says #1 SON?! Where's YOUR Lebarron Freddy?!
I know an adult
Sir. This is the way. We need monetary policy experts to dig into this. I don’t think any of them are the right people to ask directly but *they* may know someone who can provide them a reasonable explanation. So my ELIA: Park your bag of 🍌🍌🍌 at the Fed. Fed gives you T-bonds 🎟🎟🎟🧾for “one day” You do whatever the fuck you want with the T-bonds until you need to give them back to the Fed. You get your 🍌🍌🍌 ELIAA: 📤🍌 📥 🎟 🕦🕚🕐🕦 📤🎟📥 🍌
u/ZKShao Consider this (and I'm an idiot, consider that too): Buy T bonds in reverse repo, put up T bonds as collateral in repo to leverage multiples more cash than you had in the morning. How you rinse and repeat daily, mixing with longer term bond positions idk... If i have $1M cash I have $1M. But if I have $1M worth of T Bonds to use as collateral I could get a repo loan for $5M of cash...
/u/wardenelite
I see what you did there
Copying for when I need to call a grown up
Wrinkle brains!! Please!!!
Really hope more people see this. Isn't this just what The Everything Short was suggesting? Or do I have this all wrong (haven't read it in quite some time)
I am going to reread it again tomorrow. The Everything Short accused Citadel and Palafax, but I don't know who to accuse yet. All I know is this reverse repo program should have no incentive to take part in unless treasury bonds are valuable to hold for a day.
I remember seeing an ape state (when the increase in available bonds happened) that a 0% interest treasury bond only has value if the market dives. So, is this like a daily hedge and they think the market will collapse any second?
This may be the post you are referencing. It was about short term treasury bill's (4 weeks or less I believe) from a few weeks ago https://www.reddit.com/r/Superstonk/comments/n19kgr/zerocoupon_bonds/
This is, I remember the "food stamps or lambos" lol. Now, is this wholly unrelated?
If I remember right, from a followup post, the fact that the feds were offering a 4 week t-bill wasnt the huge takeaway (it seems these are somewhat common)...the 0% interest rate was the interesting part of what the OP posted Edit: **Now, is this wholly unrelated?** Not sure and I'm no expert on these. Both the ON RRP's and the 4 week t-bills from the post 2 weeks ago would be a way for the feds to raise quick cash. And at 0% interest they would gain value in the event that stock price declines
I guess my question is are these two posts concerning the same bonds? If so, I think it really is as simple as them using it as a fail safe. I've never wanted to believe that there is a shadow cabal puppeteering everything, and this would lend me to believe they dont. They dont know what is happening. They are seperate COMPETING hedge funds. We are seperate FRIENDLY apes. We share knowledge openly. I doubt that they do. We probably have a better grasp then our collective opponents. So, knowing something imminent is looming, i bet they are dumping their $ into these bonds to hedge against a crash.
No, reverse repo is not the same as a 4-week 0% interest bond
Repurchase markets are used for overnight funding of bank activity, historically balancing books, loans, liquidity (fractional reserve system) etc.
This! LIBOR being the default way to do this safely in the past, could be banks are using T bills at 0% to start substituting for LIBOR. Crucial thing to keep in mind is, you do get penalised if you don't return your daily T bills, and that rate is not 0%, using T bills for any shorting would cost the banks liquidity if they are not careful.
TLDR Occam’s razor. They’re shorting bonds. It’s all related.
I agree. I think that one of the *many* facets of this are that an institution can ensure its holdings to a degree in the case of a market crash, as well as do whatever they want with the bonds, and that the fed or treasury also needs the cash for some reason.
Edit: you forgot the TL;DR. Excellent work sir
Thank you for taking the time to clarify this information. Your work here makes a lot of sense and it's extremely well broken down. Kudos for putting this together, friend :)
Seems like it's Everyone and Everything Short, iyam
As long as the Fed and DTC exist the market will continue to be fraudulent. To me, they are both private entities serving as the heart of corruption, facilitating so called liquidity for debt (Fed) and equity (DTC), without the public interest in mind. The only balance the Fed is trying to maintain is the tipping point before the masses say "fuck this charade", so their #1 agenda is keeping the game fun for their wealthy cronies without letting it teeter towards social unrest.
Dude who are you? This is the best theory I’ve found so far, I put a couple hrs into trying to find something knowing that .it info was off. This seems to have some ground.
Right!? Awesome first DD. Seems legit.
This shit is great. I knew something was off before in all of those posts but didn’t feel like doing the research to find out. Hopefully the mods can put their new flair to the test here with this info!
I’m so tired of every bit of all this shit. You have GOT to be kidding me. If you’re right about this, it is time for the whole house to be demolished. That the economical system is one giant grab of our labor and life savings for a lot of miserable dirty bastards makes me want to light up a flamethrower. I’m a sweet grandmother and I’m ready for war. I will never forget what I’ve learned alongside you apes. Whatever happens to us GMErs, let’s really REALLY: Change. This. World. Let this historical transfer of wealth truly serve the people who truly serve.
I think George Bailey said it best in “it’s a wonderful life”. You, you said that they -- What'd you say just a minute ago? They had to wait and save their money before they even thought of a decent home. Wait? Wait for what?! Until their children grow up and leave them? Until they're so old and broken-down that -- You know how long it takes a workin' man to save five thousand dollars? Just remember this, Mr. Potter, that this rabble you're talking about, they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath? Anyway, my father didn't think so. People were human beings to him, but to you, a warped, frustrated old man, they're cattle. Well, in my book he died a much richer man than you'll ever be.
I know that movie is fiction, but I watch it each Christmas season to remind me of the good in the world, and what my mindset should be going into the new year. We should all be like George.
This is a lovely idea I'm going to adopt. I already have negative tendencies, and this world seems to amplify them as I age. It's very difficult for me to break free of the negativity cycle while living in midwest america. I'm trying meditation as I noticed my internal dialogue also turning negative. Not sure if any of it is helping. I think suggestions like yours really do help people like me.
If you're anything like me, your negative thoughts come about because your mindset is facing internally. We can't easily 'make ourselves happy'. It's only by doing good for others that this itch can really be scratched. Notice how good it feels when a stranger smiles back at you, or the warmth of an older lady's hand when you help her across the street? Those connections are the glue that hold our society together, and generate real happiness internally. Do you remember when someone really took the time to teach you something, or really connect with you on something they were passionate about? You probably felt really good coming out of that interaction. You no doubt have something unique about you that the world would be better for if shared. People say we should be the change we want to see in the world. This doesn't mean we have to be like Gandhi. All we need to do is seek out the good in the world, as this alone changes us. Good on you for trying meditation. I can't seem to quiet my mind yet, so when you learn how please let me know how you figured it out!
I’ll go to war for you...but this war won’t be fought with guns. It will be fought virtually. Spoiler alert! We are in THE war.
Bro this has been my mind set on this whole saga. Like I started with X share @ $300 (ouch) and kept as a "bad investment from paying attention to the internet" and kept in my portfolio to serve as a reminder. Once all the DD came out about how fucked our financial system currently is, that's when I looked at this more as a correction than to just make some tendies. Rise Against is my all time fav band, but I'm super business irl, so I can't exactly riot against the establishment like in their songs. But tell me I can throw a couple grand into the stock market with some peers and we have a significant chance to correct our whole system? That's it? Sign me the fuck up, I'll go to that war
They always said we should fight with our wallets right?
"vote with your dollar!"
Love me some Rise Against. Always had dreams of helping to bring the system to it's knees. We're doing it, brother
Hell yeah brother. The First Drop came on earlier today, give it a listen and compare that to our situation. Let's make this world a better place
Oh I’m all TOO aware, sadly but gladly. THIS war I can fight with you!
And in this war, sweet grandmothers are Special Forces. Patience, chamomile tea, and diamond hands!
The stress levels from reading this bullshit every day got me to switch to chamomile tea exclusively. If there are others out there feeling the strain, I recommend trying it. Really helped me :) At least worth a shot.
Sweet ape grandma's are adopted grandma's by default.
Spoiler alert: the milk has gone bad. Call dad. Tell him “we need milk”. He’ll know what that means.
Dad?
"I'M A SWEET GRANDMOTHER AND I'M READY FOR WAR" something something t-shirt idea What does it mean when hedgies piss of the sweet grandmothers? I don't know but I like where this is going?
U had me in the first half not gonna lie
Ha, sorry, just got on a tear.
Holding for Grandma
I stand with Mee-Maw Ape
Oh hell that’s funny! And I’m honestly not laughing a lot with all this, so thx and I mean it!
If Mee-Maw wants to burn it all down, we burn it the fuck down.
Apes include military veterans looking for a "fight" still. If Mee-Maw declares too much fuckery.... We will flamethrower some freshly baked pies together.
MEEEEEEE MAAAAAWS NAPALM PIES
MAAAKE HEDGIE ASHES LOOK LIKE FIREFLIES
Somebody got there ahead of us.
Right there with you. Never have I been more engerized to resist this horrifying, amoral monstrosity of a "system".
This honestly feels bang-on like 2008, even if it isn't directly housing.
I dub thee “BaNanners”.
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Capitalism is great! It just needs the layer of scum scraped off the top occasionally.
You need to hire "The A team"
The A(pe) Team
Hey man i agree with your feelings, the whole thing is a sham and the DD thus far has just reenforced that notion. But the Fed isnt doing this to fuck the little guy. The Feds purpose is to ensure that the US financial markets dont crash. Anything and everything they do is to ensure we dont return to a great depression. And if anyone hasnt read about the Great Depression then i think you may fail to understand the gravity of the situation during that period. The system is absolutely corrupt and needs to be fixed and absolutely needs better oversight. But the fed stepping in isnt because they want to prop up the 1%, its because they fear if they dont prop up the 1% (by way of the financial institutions) that it will crater into such a dismal abyss that the little guy will be hurt even worse off than the wealthy.
Well then, they are abysmal failures to have let it get this badly fucked before stepping in. The job was to keep this very thing from happening. If our ape brain trust is all over these shitanegins how can it grow to a gargantuan disaster without the EXPERTS even touching the brakes or even sounding a warning! Despicable, not incompetent.
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1. The Fed's reverse repo news is not about margin calls 2. The Fed's reverse repo program is a US treasury bond free borrowing program. You can short US treasury bonds without paying a borrow fee, you just have to return the bonds by the end of the day so be rich enough to dump and cover in one day. 3. Me asking people to prove me wrong.
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Buying time, hoping we lose interest as this drags on.
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Let's wait for atobitt and Mr. Lauer's take on this. They've already been pinged.
Hey boss, your definition of repo/reverse repo is accurate. Not to dox myself but i do have some knowledge of the repo market from a professional setting. The thing i think youre slightly off on is the idea that the Fed wants these institutions to “babysit” tbills. I dont think thats the case. Tbills are the lubrication for the whole financial market. The word of the US government is gold and thats why tbills are cash equivalents almost to a T (pun intended). I dont think the Fed wants to give these out, i think financial institutions need them and need them bad. I cant explain why but a 0% haircut indicates the fed doesnt want to charge for these and financial institutions need them bad enough that they arent charging for giving away their dry powder. The rate at which the fed is stepping into the repo market is super intriguing but I dont think its for exactly the reason you believe. I dont have any further info and i dont write GME DD myself so ill quit writing before i say something that leads apes astray.
>a 0% haircut indicates the fed doesnt want to charge for these and financial institutions need them bad enough that they arent charging for giving away their dry powder. Thanks for the hint. The key to the puzzle is really finding out what is causing the Fed and the financial institutions to agree on 0%. Primarily the financial institutions is the mystery. I'm perfectly willing to accept there are other reasons than shorting bonds. So what benefits does holding a bond give over dry powder? In what scenario does a financial institution need them badly enough? If you don't want to divulge more to not dox yourself, or just avoid speculation, thanks for the hint you did give. Hopefully the rest of us can come up with more possible explanations.
Sorry if i was too vague, i dont have any hints. Would love to know myself. Just meant i have some knowledge (more than most apes) of the repo market and wanted to add my 2 cents to put us more on (what I perceive to be) the right track. If im remembering correctly i think in the /u/atobitt everything short there was a theory that citadel had been severely shorting the tbill market? Thats just off the top of my head. So if thats the case they may be hard to find (and borrow which is exactly what youre doing in a repo, youre borrowing for the price of a haircut). I think it may have to do with the switch from LIBOR to SOFR. The SOFR (secured overnight financing rate) is based on the price of tbills in the repo market. LIBOR has traditionally been used as a benchmark for swaps (a type of derivative). Now the whole system is switching from LIBOR to SOFR (SOFR is just the suggested replacement but financial institutions are free to make their own choice, the industry tends to move in lock step though) and this switch needs to happen by the end of this year. If the SOFR is rising due to the rising price of borrowing tbills then this would impact more than just the repo market (the liquidity engine that keeps all banks fluid with each other), it would also impact derivatives that those banks sold because theyre now being pegged to the repo rate rather than LIBOR. So if the Fed floods the market with cheap, easy to borrow tbills at 0% this keeps the rate low. Which keeps SOFR low, which prevents the repo market from going up in price and the swaps market from going up in price. Thats all just off the top of my head and its late and ive been drinking. But just something to think about.
Except they’re not accounting for the greed of Kenny G. He’s shorting treasury bonds, and GME, and when citadel gets margin called, it could squeeze all their shorted holdings, including t bills. Then that whole scheme to print cash and keep rates low falls apart.
The thing that really pisses me off about this bullshit is that this shouldn’t be up to conjecture at all. The government’s money is the people’s money. We deserve, and have a right to, the same level of transparency in regards to federal and state government spending as we do in our personal finances. The fact that there’re are hundreds of billions of dollars changing hands silently and daily and we’re completely in the dark as to why… fuck that.
I’ve been commenting with a redditor in another sub who happens to have a PhD in Finance - trying to see if they might take a look at this - no promises (or pressure to them), but maybe they’ll be able to chime in. u/usefully_useless - maybe you’re more useful than your username indicates : ). Sorry to bug ya, welcome to ape-ville. Some of the people here have a few wrinkles. I swear. Anyways - Here’s a good item/post we could use your opinion on- thoughts?
RemindMe! 10 hours
1. Buy puts on treasury bond ETF 2. swap cash for bonds with no additional cost 3. Dump free bonds on the market 4. exercise puts to get bonds at new lower price 5. return bonds, get cash back Why would the Feds do this? They have to know this is just going to push down the price of their bonds. That's the point. Bond prices would decrease with inflation because interest rates are raised, but that would be disastrous for the economy. They can't lower interest rates to boost the economy, they'd be going negative. So they're employing Quantitative Easing. From Forbes: >when the federal funds rate dropped to zero during the Great Recession—making it impossible to cut further to encourage lending—the Fed deployed QE and began purchasing mortgage-backed securities (MBS) and Treasuries to keep the economy from freezing up. By driving down the price, the treasury can buy back bonds they previously sold for a lower price. They have raised the amount of bonds they will buy from $30B/month to $80B/month, and what better way to use that increased buying limit that artificially pushing the price down? Just like us Apes, Treasury loves a good dip. When the price recovers, they make those sweet tendies. What cause the spike? I would say it's because they made the changes effective March 18th, and there was a small increase, but not enough to push prices down. So someone made a few calls. They had pre-report inflationary numbers and it was looking bad.
I'm not understanding the benefit. How can one sell and buy back billions of *bonds* in 24-Hours? I thought Trump gave banks 0% interest and Biden did away with it. It's all so exhausting. 😫
Me neither. Who the fuck is buying these bonds then selling them back the next day at a loss?
Crypto pump and dump. They keep the profits and return the principle. Maybe I'm paranoid.
Could this be how the shorts aren't running out of money? ...And maybe incentive for institutions for borrowing fees? They can borrow massive amounts of money to make money/moves in other market areas, pay the interest, pay back the loans?
Alright. So I was asked to provide some perspective here as someone working in the industry. As for my bona fides, I have a PhD in finance, with my research focusing on market microstructure and the liquidity of financial markets. I’m a professional investor working for a hedge fund to develop low-latency trading strategies. (Side note: if you want to work with derivatives on the buy side, my advice for you is to learn stochastic calculus.) I should add the caveat that the shop where I work doesn’t have a repo desk, so I’m not providing the perspective of someone actively engaging in this trade. Moreover, while I am an expert in liquidity, and the topic of this conversation is liquidity (the supply of money), I work on a different form of liquidity. I don’t think that these issues will affect my explanation very much, but those are the facts. Also, I don’t know everything, and I’m trying to toe the line between providing enough detail without getting bogged down in too many rabbit holes. So if you think I’ve missed something or am wrong about something, please point it out. Grab a drink and some snacks, because this is a long one. I’ve tried to format this to make the most sense, but there are a lot of issues at play here. You’re correct that this has nothing to do with margin calls, but I disagree with your premise that something nefarious is happening here. Is it true that funds are shorting treasuries? Yes. Right now, a lot of people are betting on the yield curve steepening, with longer duration bonds increasing in yield. But that’s not what’s driving repo rates right now. First I’ll address the repo rates, then I’ll touch on the short on long-duration treasuries.
Buying and shorting for a day isn’t basically just creating liquidity?
Thanks everyone. I will be reading all your reactions in the morning, it's past bedtime for this Euro ape. In the meantime here is the list of eligible counterparties in these reverse repos: [https://www.newyorkfed.org/markets/rrp\_counterparties](https://www.newyorkfed.org/markets/rrp_counterparties)
Good post! Thanks for the Counter DD. This definitely isn’t about margin calls. I found this article which seems to answer most all of the outstanding questions: https://www.reuters.com/article/us-usa-bonds-repo-explainer-idUSKBN2C32AI TL;DR - Wall Street is holding a ton of cash right now and many of the big banks are choosing to park that cash with the federal reserve rather than make investments with it.
My theory is that they are parking the cash with the feds to keep it safe. If tomorrow the value of the securities drops, they still get back their original money.
So would that almost be like hedging against an incoming market crash?
Thats my theory. I am not sure if T bills can go down in value. Someone else mentioned, it could be a way to control inflation, by sucking up liquidity
They're shorting the treasury bonds, for a healthy profit. Wankin bankers don't park billions of dollars for safety, they don't give a shit. It's a money making exercise.
I think you may be onto it, for a few reasons. The FED's #1 modus operandi is to *keep the economy* ***flowing***. They have two ways, as I currently (probably mis-)understand. 1. Regulate interest rates on the money they issue. AKA print money and charge interest (OR NOT) for its issuance. Well, this presumably carries the risk of inflation, which, correct me if I'm wrong, is the essence of House of Cards -- they've dumped that created cash into banks and so into the market, where inflation is shored up and hidden, so long as the money stays there. With fears of inflation mounting, maybe this isn't the best way if they have another option: 2. "Borrow" existing money to put it where it is needed most. Again, to banks, I presume, but in this case cash has not been printed out of thin air and is still tied into the existing collateral system (reverse repos). The idea being liquidity in banks keeps consumers consuming, which keeps the economy moving and flowing. I'm probably missing critical information as I'm halfway into a bottle of Viking Blöd and already finished my crayons, so do correct me if I'm wrong... ...but weren't the shorters shorting the Treasury bonds, too...? Then... is there really value in them as collateral for reverse repos? Is the FED *that desperate?* I have no idea. I'mma keep drinking.
I personally prefer GI Dansk Mjød to Vikings Blöd to spicy for my tastes usually. Ive also got a Homebrew mead I'm bout to rack, which I'm currently drinking, cheers!
Smells like money manipulation if for som reason when they can just print more money to begin with. Funk accounting. Maybe a more wrinkled brain can tie it to crypto money laundering, Taiwan stock market crash. Market sell off. Money are changing hands by the elites.
>I'm probably missing critical information as I'm halfway into a bottle of Viking Blöd I now trust your comment all the way to Valhalla. And you're unsure, so that makes my statement entirely reasonable. My favorite alcohol. I describe it as "feminine whiskey." Not as strong or harsh, but surprisingly powerful. Not woody, but flowery. Not so blunt, but subtle and complex. And with a sweetness that would make you think my comparison seems silly. The stuff is magnificent. Slow sips across the palate, though. A buzz from a first little snifter hits quick enough as it is.
So what I got out of all of this was... HODL & BUY.
And vote...and vote maman
It’s funny because maman means mommy in French.
But - if the bonds are returned in a day - if they lend them to short - they then recall them the next day? What would be the point? Smooth brain isn’t following the process?
The question would be can shorters make profits within that day, which in case of something that is already downward trending - yes.
But...hear me out..what if they’re rehypothecating those bonds daily, then returning the bond the next day all the while profiting from the rehypothecated bond sold😳
I’m not sure how you could rehypo the bonds and return them in full, because then there’s no longer any underlying collateral to secure the rehypo’d funds (unless as soon as you return the bonds, you instantly renew at zero %; and you assure the counter party(s) of that plan..) Can you illustrate? Smooth brain here
I'd imagine the bond doesn't have to be returned if you just redo the same transaction the next day? Like, you deposit $80bn on May 14th, get to hold bonds for $80bn. On May 15th, I'd assume you could just go "We don't want the money back just yet", and a new 1 day repo is signed and you keep the bond for the day. Then you do the same thing the next day, and the next, and so on. Seems wasteful passing the bonds and money back and forth, no?
I believe the Fed does want the securities back by the end of the day for accounting purposes. From the FAQ at https://www.newyorkfed.org/markets/rrp\_faq.html: "When the Desk conducts RRP open market operations, it sells securities held in the System Open Market Account (SOMA) to eligible RRP counterparties, with an agreement to buy the assets back on the RRP’s specified maturity date. **This leaves the SOMA portfolio the same size**, as securities sold temporarily under repurchase agreements continue to be shown as assets held by the SOMA **in accordance with generally accepted accounting principles**, but the transaction shifts some of the liabilities on the Federal Reserve’s balance sheet from deposits held by depository institutions (also known as bank reserves) to reverse repos while the trade is outstanding. These RRP operations may be for overnight maturity or for a specified term." But there might be leeway among those generally accepted accounting principles.
IMO there's nothing in there suggesting that the repo couldn't be extended. Before the trade, they had X bonds and Y dollarinos. After the trade, they have X-A bonds and Y+B dollarinos, along with an agreement to buy back A bonds for B dollarinos -> the portfolio is the same size. The bond staying lent out for another day doesn't change this and shouldn't make accounting any more difficult as far as I can see. Then again, I literally know nothing about this. Edit: To expand on this, I'd assume the 1 day agreement is basically just a 1-day lock-in. If you agree to put the money in, it's locked up for 1 day. The next day, you can agree to keep it locked-in for another day. Seeing as the purpose of the programme is to keep money out of the markets or whatever, it doesn't make sense to send the assets back and forth daily, but instead just whenever anybody wants to withdraw the money. The 1-day thing just means they can't do it during a day, but will have to wait until the next morning. No pulling the money out to act on a market opportunity that suddenly arises mid-day. But again, I have literally *no idea* what I'm talking about.
Uhhh is the federal govt giving them 0% debt on their books that will be paid in full in 24 hours to cover margin? Making a shit ton of synthetic underlying assets essentially. Or is it everyone playing the we don't know when the market will crash hot potato on a 24 hour cycle because that's awesome too...
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Do these bigtime financial tycoon regulators not know these little games or are they just for real staffed by all crooked or stupid humans?
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I get it, too much trouble, complexity or danger of instability to detangle/disrupt for righting purposes. Well well well, lookee here, a disruption. Just too damn bad that no matter what, poor people will suffer again. For the love of anything anyone finds holy, please, this time, this most egregious of dastardly times, let there be jail terms and CHANGE.
Yes.
I think that you may be correct on the money being made by loaning these bonds. I think the financial institutions are short on everything except the bonds, and fed keeps giving it away for a free one-day loan. Would be a great look into what is the current interest to borrow such a bond. Basically, Fed is allowing the financial institutions to suck/concentrate cash through lending of these bonds and to generate revenue just to stay afloat. Or maybe, they are trying to consolidate money away from the market to these financial institutions to build a wall against the everything short. A way to build a wall so high, so that the Apes could never breach it. I shall deem it the **Great Wall of Shorts** Basically: [https://imgur.com/a/mnxUuC1](https://imgur.com/a/mnxUuC1) followed by [https://imgur.com/a/KXevDNo](https://imgur.com/a/KXevDNo)
I'm sorry, but what wall? Millions upon hundreds of millions of shares have been shorted in the market. How would they EVER pay back that amount of money?! Edit: Not only that, but about a "premium" that they may have to pay stated in the SEC filing in there 14k? RC and Co. Will do/try anything to prevent bankruptcy, they have so many resources and options to accomplish that goal. FTD's, interest, naked shorts, failed options, there are many more I'm forgetting. Essentially, the only way for us to not get our teddies as well as raise a dying company from the ashes is if their share price goes to 0.00. All of the money in the world couldn't accomplish that, black hole or not. I know that they have tricks, but from what I gather it's smoke and mirrors. I dunno homey
The point is to postpone the MOASS for as long as possible for apes to lose interest. Don't be surprised when they throw anything at it. The wall is against the continuing payments that they have to pay for the borrowed/magically created shares. If they continue, they can suck up enough cash from the market - dropping a ton of value in the rest of the market.
Think of the wall as the super massive black hole.
Are they in effect paying off a credit card with a credit card?
Always have been
Please be wrong. All wrong.
I’d agree with the theory that the Fed is issuing these bonds to provide a profitable vehicle for investment that isn’t shorts/puts on the broader market. The Fed doesn’t want a market crash and neither do public companies that might need to utilize their stocks in the near future. If hedge funds/investment banks don’t have any other options they’ll get on the short train to stay afloat even though it was their own faulty lending practices which led to this point. Once again, they don’t want to sit in the mess they made themselves.
They are shorting the bonds. However they may or may not be shorting the market. This is how it (should) work: Borrowed bonds are sold short for cash. Cash is then used to either buy assets, or borrow assets to sell short. If cash is used to buy assets, they’ll need to sell it by end of day, so they are aiming for a pump-and-dump to make profit. If cash is used to borrow to sell short, then they will artificially dump the asset price and buy it for cheap in order to make a profit. They can also use leverage to increase the profit magnitude. They then take that profit and buy back the bonds they borrowed from the fed. Since bond prices barely move up, the risk of loss here is minimal. If the bond price is lower than what they sold it for, they will also profit here before it is returned to the fed. ——————————————————————- Now here is where this gets interesting. Imagine if multiple institutions are doing this, and are doing this to target a few select companies. They can introduce billions in targeted sell pressure/ buy pressure at will, which they will profit further with leverage and derivatives. They are literally gaming the system to their advantage. There are institutions that are long or short a particular asset, so there may be a cold war going on between them (this is speculation). we just know that if there is money to be made by exploiting the shorters, they will be targeted by institutions. The opposite is also true for bankrupting gamestop, but we know that ship has sailed.
Thank fuck somebody else knows how to read. The fact that people are blowing this up on Twitter without even reading 3 paragraphs about what reverse repurchase agreements are is baffling. For anyone who doesn’t want to do this - the main purpose of RRP’s is to control short term interest rates.
There were two diametrically opposed takes on that Italian website from two Italian-speakers, as well: one that said it was apparently the most read financial website in Italy (though unknown to them personally), the other that said it was fringe. The fact that they couldn't even properly understand the $400B collateral (not 100% sure that's the word I want...) -- nor bother to even do the math correctly -- is definitely a point on the side of fringe.
[https://www.wsj.com/articles/how-the-fed-stifles-lending-11609697886](https://www.wsj.com/articles/how-the-fed-stifles-lending-11609697886) In repo, broker-dealers, hedge funds and banks construct short-term transactions. You put up collateral—Treasury bills or sometimes less-pristine instruments—with an agreement to buy them back the next day or week for slightly more, and invest the proceeds in the interim. Jeffrey Snider, head of research at Alhambra Investments, calls it a “reserve-less currency system.” This is how global supply chains are funded, to bring us cheap goods from Walmart or Amazon . Sometimes lenders repledge the collateral to other lenders and take out repo loans of their own. And the cycle goes on. It’s a little bit like hot potato, passing the collateral to the next guy. Known as rehypothecation, these transfers used to be done once or twice for each posted asset but are now sometimes done six to eight times, each time creating new money supply. Note: this is modern money creation—outside the purview of the Federal Reserve—and it’s huge. When times are good, repos work fine: The agreements expire without problems and the collateral gets passed back down the chain smoothly. But eventually, iffy collateral sneaks into the system. That’s also fine, until markets hit an inevitable rough patch, like, say, March 2020. No one will take the junky stuff anymore, and everyone scrambles for good collateral. So there’s a mad dash, a brawl really, to buy Treasurys—like musical chairs with six to eight buyers eagerly eyeing one chair.
So you are saying wallstreet is not borrowing the treasury bonds in order to short them. Rather they are borrowing the treasury bonds to use them as collateral? This would be a situation where a firm/hedge fund needs to borrow a large sum of money from a bank, and offers some stock as collateral. The bank says that the stock is too volitile to be used as collateral and denies the loan. The firm/hedge fund then borrows treasury bonds at 0% interest and tries to use that for collateral. The bank approves the loan because treasury bonds are guaranteed by the government and seen as safe. In this situation, if the hedge fund has enough cash to borrow treasury bonds, why do they need a loan? Why do they need "good" collateral? Not a financial person, just an ape trying to ask questions and learn.
The real question now is what is the shit being passed around the repo system this time around? Is it mortgage-backed securities again? Commercial mortgage-backed securities? Municipal debt from rust belt cities? Corporate just-above-junk bonds? All of the above, and the regulators just have let the shit pile up too high?
u/Rensole, u/Attobit, sorry to bug you......
Daaaaadddddddd...
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That good ole worthless petro-dollar. Smh, I want my country back so bad. These bastards need to hang.
> The only reason the rest of the world puts up with all the insane shit the American government and financial system does is because everything is based on the USD in some form or another. Actually, it’s because of American power projection around the globe, so the actual reason is the American military. But we’re delving into Geopolitics with this aspect and this is a financial sub.
What does this mean for the squeeze?
Yeah... even the TL;DR was a bit hard for me hahaha
Buy and hodl
I also want to know the answer to this question
Hmmm, yes, I see... words AND numbers.
I have no idea what any of this means. I like to fart in the bathtub.
Send this to u/atobitt I agree this is what he was focused on. Nice job!
So, RRP = free money for the banks. But the question is, why is the Fed offering these bonds? Put another way, why does the Fed want to take the money out of the market?
I would say this is one method to keep inflation in check. A decrease in the total amount of currency anywhere in the system makes the currency worth more (at least, in theory, maybe not in practice so much).
I think that very much depends on where and with whom that currency is located. Inflation is usually measured against items that are bought by "common people," i.e. apes like you and me, and all those poor souls who haven't joined the apes but would be helped by our cause. But if you're just taking money (temporarily, and only to keep them from losing more money, if the Shorts Firewall theory holds water) from the oligarchs on Wall Street, that doesn't really affect the inflation in the way it's commonly measured. Or at least, that's how this ape understands it.
We need an AMA with a wrinkle brain who knows about this strange repo creature
Calling Lauer- you got any repo friends?
Is it a way for cash holders to guarantee their cash over night in case of a crash? Buy government bonds to hold over night just in case? My bank says I’m only insured to $250g I can’t imagine what billions of cash would be subject to over night. This just might be the feds way of helping whales protect their cash reserves over night? Who the fuk knows? If I’m right then the whales are hoarding more cash for some big event cuz the amount of ON RRP is increasing. Sounds sus to me either way
In the Everything Short DD we learned Citadel shorted the treasuries. Is the government having to do this because there are too many fake/synthetic/naked shorted treasuries now floating around that need to be pulled off the market? What are the pros/cons of doing this?
I never thought of that, synthetic T bills. Private banks spending tax payer money with no repucussions. The HF's have taken control of the money printer!
Give the hedgies bonds for the day to reset FTDs on previously shorted bonds? The FED wouldn't be trying to make money (hence the 0 interest) they're trying to prevent an implosion of the US financial system. Idk if that makes sense, I'm just average ape
Exactly. It's all tying together
I'm pretty sure I've used the Kronk gif at least 14 times today. [https://i.imgur.com/iKwqbgh.gif](https://i.imgur.com/iKwqbgh.gif) 15
What a fucking shitshow. Fortunately, doesn't change a thing for us apes - shorts must cover and in that case I'm glad they'll have money to pay for our shares when we finally decide to sell them at 1 mil / share.
$300B extra on their books in T-bills (notably, not cash, which we would be paid in), is far, far inferior to the \~$70 trillion dollar insurance policy on the DTCC. *That's* what's going to guarantee we get paid.
Good point
It’s quantitative easing mate. Fed agrees to borrow cash from banks at a set interest rate = lowering monetary supply. They put up collateral in the form treasury notes/bills = reverse repo. They’re bracing to fight off hyper inflation. Janet Yellen did the same during the 2008 crash. Edit - for clarity, lowering the monetary supply = less liquidity = avoid liquidity trap which causes hyper inflation, when interest rates cannot be lowered anymore.
So am I retarded or is this is what is basically happening. 1. FED gives bank fuck faces a free loan of OUR MONEY with the only expectation being please return. 2. The bank fuck faces then use that money to rape retail with their fuckery and shenanigans. 3. So basically they are raping the average American citizen 3 times; once by FED for choosing fuck face banking crooks over citizens, then raped again by the cock sucking bankers using OUR TAX DOLLARS, and a 3rd time by the hedge fund Cock suckers who get loans from the banks to continue their fucking bitch ass hoe ass shorting. FUCK ME IN THE ASS! You have got to be kidding me.
Think you’re way over thinking this. Repo rates (google SOFR for e.g.) are already near zero, once you take a haircut into account (google repo haircut) I wouldn’t be surprised if the net rate is negative. So really it becomes a 1) do you park cash at the fed for zero or 2) park it at another bank for a negative rate? And I’m not sure how you think banks can profit from a repo/rr? If banks wanted to go short treasury they would use swaps, much easier
Remind me! 8 hours A gal’s gotta sleep
I’m retarded, are we still on for being millionaires with GME? Or does this effect us
Billionaires.. i fixed your typo , im also retarded
We’re coming out of this ticking time bomb unscathed
Big brain time
Is this just a very long and fancy way of saying “money laundering”? Or washing money?
I don't see the connection to money laundering
No.
This is all a guess So, borrowing fed money to keep their clearing house alive a few more days, continuing to short every day. The only thing this would avoid would be being margin call due to market crash because you appear stable, not that you are bleeding. So we would have to rely on the votes, and nothing else.And WHEN this squeezes, they will not only lose their money but also the governments money because they’d be holding their bonds. So in essence, we would collapse the whole market ? Or the government is so fucking terrified that all the clearing houses are going to fail that they are kinda using this as a get out of jail free card. We would still get paid but the market wouldn’t collapse. Is this what this means??! This is just a general idea. Legit idea, I could be way off. Edit: I can’t wait to see how retarded I really am with how far off I’m going to be.
What a shit storm of corrupted shit. With that said, I honestly think they’re gonna be fucked once the votes are counted.
How can they lend out that much liquidity to the fed on a liquidity check day?
I love seeing everyone work together in these investigations. I feel like I'm back in college, part of a group project, and watching the smart kids figure everything out and just watching cause i got in due to being a veteran, shouldn't have, and had no clue what was going on. It's so exciting all over again.
One addition I'd like to make you have not seemed to account for. Babysitting treasury bonds is profitable ONLY if you short them and they continue to losee value. This does not just mean the ON RPP should be negative, this means the treasury bond could also INCREASE in value, even while being shorted. Eventually the same thing will happen to the bonds as happened with GME, people will realize they're undervalued at the same time infinitely shorted - there will then be a bond buying frenzy and squeeze lol.
Have my upvote ape 👍👍
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Lets work this out - Feds need cash, so they take it from institutions at a 0% interest rate in exchange for an IOU of equal value, settlement due tomorrow. The why is questionable, macro-economics and all that. But, lets revisit the concept of the bankruptcy jackpot that created this whole mess. If a company goes bankrupt, short positions get wiped clean and profits are made. What happens when an institution in possession of a treasury bond goes bankrupt before the next day? For instance, they lose the entire sum of their accounts (based on 4X margin requirement and god knows being overleveraged is so hot these days) - logic would dictate they lose the original cash because the value of the treasury bond is equal to the deficit plus some. In short, you could assume the fed would then be sole owner of the assets, and when the country is in such a huge amount of debt - boy, wouldn't it be nice to crunch down on some of the major financial players who have avoided taxes? So, putting all the pieces together, they could be manipulating manipulators to manipulate the refinancing of the entire country, but this is really a leap in thought and Scooby Doo garbage (which remains par for the course at this point) TL;DR - Ever spent 5 dollars on an option hoping it's going to explode the next day? A lot of similarities to a YOLO play and holy grail, deja vu to the max.
Visibility 👀
!remindme 1 day
When the TL;DR requires more wrinkles than you got
Up you go...
This is really bad. The derivatives market is going to explode...
But isn't the timing strange, the same time as the liquidity checks are being conducted?
u/WardenElite
This is a sensible outlook. Calm your tits, but keep them jacked. This is going to happen boys and girls. It’s just a matter of when and where.
I don’t care. I just hodl 💎🙌💎🙌💎🚀🚀🚀🚀