Cracks emerging in money markets?

Discussion of the Cash portion of the Permanent Portfolio

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Tortoise
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Cracks emerging in money markets?

Post by Tortoise » Tue Sep 17, 2019 11:40 pm

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Smith1776
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Re: Cracks emerging in money markets?

Post by Smith1776 » Wed Sep 18, 2019 4:46 am

Very interesting stuff.

This really brings back to my mind that old question that everyone has been asking for the past 10 years: what will be the cause of the next panic in financial markets?

I'm willing to opine here. I think the epicentre of the quake will be in China.
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Re: Cracks emerging in money markets?

Post by Kbg » Wed Sep 18, 2019 8:59 am

I'm curious as to where all the negative interest stuff is going to go which to me is a crisis all by itself. It literally makes no economic sense. (Or if someone has seen a good explanation, please post it. I would enjoy reading about it.)

Perhaps it's as easy as there is soooo much money in the world created by the central banks that cash is now trash???
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Re: Cracks emerging in money markets?

Post by shekels » Wed Sep 18, 2019 9:21 am

Kbg wrote:
Wed Sep 18, 2019 8:59 am
I'm curious as to where all the negative interest stuff is going to go which to me is a crisis all by itself. It literally makes no economic sense. (Or if someone has seen a good explanation, please post it. I would enjoy reading about it.)

Perhaps it's as easy as there is soooo much money in the world created by the central banks that cash is now trash???
Red Dollars and Green Dollars and who controls which. Got me thinking again on what is Money vs Currency.

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Re: Cracks emerging in money markets?

Post by dualstow » Wed Sep 18, 2019 10:23 am

Kbg wrote:
Wed Sep 18, 2019 8:59 am
I'm curious as to where all the negative interest stuff is going to go which to me is a crisis all by itself. It literally makes no economic sense. (Or if someone has seen a good explanation, please post it. I would enjoy reading about it.)

Perhaps it's as easy as there is soooo much money in the world created by the central banks that cash is now trash???
I know less than you, but just to get the conversation moving on NIRP, isn’t it to keep a population from excessive hoarding? And to keep banks lending? I guess the alternative would be for banks to charge a flat fee for money storage but maybe that’s only an illusory alternative.

They say the way to make money during Japan’s lost decade was to sell home safes.
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Re: Cracks emerging in money markets?

Post by Tortoise » Thu Sep 19, 2019 3:28 pm

Fed intervenes in money markets for the third day in a row...

https://www.bloomberg.com/news/articles ... raight-day
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Re: Cracks emerging in money markets?

Post by ochotona » Thu Sep 19, 2019 7:51 pm

How can this hurt Joe Average investors? I don't go around all day thinking about the repo market. Might MM funds "bust the buck"?
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Re: Cracks emerging in money markets?

Post by Tortoise » Fri Sep 20, 2019 12:21 am

ochotona wrote:
Thu Sep 19, 2019 7:51 pm
How can this hurt Joe Average investors? I don't go around all day thinking about the repo market. Might MM funds "bust the buck"?
Since the repo market is apparently the "plumbing" of the banking world, it's not very sexy and hardly anybody (including us) pays much attention to it.

I really don't know enough about the repo market to know what would have happened if the Fed hadn't stepped in. All I know is that the Fed has injected $203 billion in the past three days, which is 48% of the size of the 2008 TARP program ($426 billion). And it may continue.

And yet this story is still just a blip in the headlines. Interesting.
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Re: Cracks emerging in money markets?

Post by pugchief » Fri Sep 20, 2019 7:37 am

Fidelity MM (SPRXX) which generally yields 0.25% or so more than their Treasury MM (FZFXX) is now paying 0.1% less.

I wonder if there is more to be concerned about than we think?
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Re: Cracks emerging in money markets?

Post by dualstow » Fri Sep 20, 2019 7:49 am

pugchief wrote:
Fri Sep 20, 2019 7:37 am
Fidelity MM (SPRXX) which generally yields 0.25% or so more than their Treasury MM (FZFXX) is now paying 0.1% less.

I wonder if there is more to be concerned about than we think?
Hmm, Vanguard Prime is still yielding more (2.08%) than Vanguard treasury MM (1.97%). Although, Prime’s expense ratio is 0.16% while treas is 0.09%.
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Re: Cracks emerging in money markets?

Post by jhogue » Fri Sep 20, 2019 9:58 am

pugchief wrote:
Fri Sep 20, 2019 7:37 am
Fidelity MM (SPRXX) which generally yields 0.25% or so more than their Treasury MM (FZFXX) is now paying 0.1% less.

I wonder if there is more to be concerned about than we think?
Don't buy repos. Don't buy money market funds "juiced" with repos. Don't be sorry. Buy Treasurys.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Cracks emerging in money markets?

Post by shekels » Fri Sep 20, 2019 9:59 am

ochotona wrote:
Thu Sep 19, 2019 7:51 pm
How can this hurt Joe Average investors? I don't go around all day thinking about the repo market. Might MM funds "bust the buck"?
Some institution(s) needed cash.
IF there was no short term cash for them to borrow well think possibly Lehman Brothers.
Liquidity is needed for the Market or there will be no Market.
I guess we will see months down the road, maybe what is all about.
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