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Strategies & Market Trends : US Inflation and What To Do About It -- Ignore unavailable to you. Want to Upgrade?

To: ggersh who wrote (1171)	10/8/2019 12:08:07 PM
From: RetiredNow	1 Recommendation Recommended By ggersh Respond to of 1504

I think JPM is the biggest whale benefitting from the repos. I read somewhere that they were implementing shifts in their balance sheet required by Basel II rules and it hit the repo markets hard. That's what got me thinking that the big banks are in danger of having their capital come under some serious stress, as the yield curve has not been kind to them for awhile.

To: ggersh who wrote (1171)	10/8/2019 3:32:49 PM
From: RetiredNow	Read Replies (2) \| Respond to of 1504

here we go, ggersh! The Fed announced a resumption of QE, although they aren't calling it QE. Make no mistake, this is QE4. And guess where their focus is? Short dated treasuries and the repo market, just as I've been saying. So my bet on short dated/duration treasuries will continue to pay off, since the biggest whale of them all, the Fed, is going to prop up that market. The thing we're likely to also now see as the Fed allows their balance sheet to grow organically (aka QE4), is that short dated treasury yields will come down, which should help to steepen the curve a bit and relieve some pressure on banks in the short term. Why would all of this be necessary if the economy was ok? The answer is that it would not be necessary if the economy was ok. The economy is not ok. Also, one more thing. Trump is going to see this as a green light to go tougher on China. Don't look for a deal of any kind before his re-election. Even if Warren wins, she's not big fan of China's either. So China is staring at an anti-China Trump or an anti-China Warren. Which one will they go for? Doesn't really matter, because this trade war will be with us for the foreseeable future, which means stocks are not going to have a pleasant time of it. ----------- Fed to resume asset purchases to prevent a cash crunch