Cracks emerging in money markets?

Discussion of the Cash portion of the Permanent Portfolio

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Tortoise
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Re: Cracks emerging in money markets?

Post by Tortoise » Mon Sep 23, 2019 5:29 pm

I still don’t quite understand. Has the Fed been injecting billions of dollars into the repo market each day (e.g., giving it to the banks like “free money”), or has it simply been lending that money to the banks at below-market interest rates?

If the repo lending rates spiked this past week because the banks lack sufficient reserves, then doesn’t that mean the reserve requirements are doing their job, i.e., maybe the banks should dial back their lending a bit to correspond to the reserves they actually have?
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Kbg
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Re: Cracks emerging in money markets?

Post by Kbg » Mon Sep 23, 2019 11:30 pm

Its way complex...but the bottom line is it isn’t the liquidity being injected but the spread that matters. Wide spread basically means trust is breaking down.
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Re: Cracks emerging in money markets?

Post by boglerdude » Tue Sep 24, 2019 1:43 am

https://fred.stlouisfed.org/graph/?g=mc6A

Looks like a lot of e-cash sitting around compared to before 08. Thats still not enough liquidity?
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shekels
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Re: Cracks emerging in money markets?

Post by shekels » Tue Sep 24, 2019 8:23 am

boglerdude wrote:
Tue Sep 24, 2019 1:43 am
https://fred.stlouisfed.org/graph/?g=mc6A

Looks like a lot of e-cash sitting around compared to before 08. Thats still not enough liquidity?
Exactly Kbg
"Wide spread basically means trust is breaking down."


"The increased role of non-bank institutions in providing credit means that an increasing proportion of international finance comes from unregulated sources. Effectively, this means that these institutions, including money market funds, investments banks, etc., have unwittingly assumed even bigger risks in their lending practices than commercial banks. This also means that when the downturn comes, the share of non-performing and/or defaulted loans will grow higher than before."

I can hear them asking ..What's in your Wallet I mean Portfolio/Collateral?
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jhogue
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Re: Cracks emerging in money markets?

Post by jhogue » Tue Sep 24, 2019 8:37 am

Kbg wrote:
Mon Sep 23, 2019 11:30 pm
Its way complex...but the bottom line is it isn’t the liquidity being injected but the spread that matters. Wide spread basically means trust is breaking down.
+1

For even more detail and analysis, see "Securitized Banking and the Run on the Repo," by Gary Borton and Andrew Metrick, a National Bureau of Economic Research working paper available on-line:
https://www.nber.org/papers/w15223

For me, the bottom line is that Uncle Harry's wisdom still prevails. Own each asset in the purest form possible, with the fewest pieces of paper between you and your money. Avoid the repo market. 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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ochotona
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Re: Cracks emerging in money markets?

Post by ochotona » Tue Sep 24, 2019 6:57 pm

The Fed said they will inject liquidity until October 10-ish. So what happens after then???
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Kbg
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Re: Cracks emerging in money markets?

Post by Kbg » Wed Sep 25, 2019 5:44 pm

Fuhget about it, it don’t mean nuthin.
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Re: Cracks emerging in money markets?

Post by dualstow » Mon Sep 30, 2019 10:33 am

I hope Pug won’t mind if I add a WSJ link. Actually, the link in the OP is from the WSJ.

Fed Adds $63.5 Billion to Financial System in Repo Transaction
https://www.wsj.com/articles/fed-adds-6 ... 1569846438
Under political pressure, Chick-Fil-A 🐓 chain cuts off the Salvation Army - wsj. :o
Vanguard treasury money market now yields 1.71%
compounded (last week, 1.72-3%)
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pugchief
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Re: Cracks emerging in money markets?

Post by pugchief » Mon Sep 30, 2019 8:31 pm

dualstow wrote:
Mon Sep 30, 2019 10:33 am
I hope Pug won’t mind if I add a WSJ link. Actually, the link in the OP is from the WSJ.

Fed Adds $63.5 Billion to Financial System in Repo Transaction
https://www.wsj.com/articles/fed-adds-6 ... 1569846438
Why would I mind?
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dualstow
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Re: Cracks emerging in money markets?

Post by dualstow » Tue Oct 01, 2019 7:32 am

pugchief wrote:
Mon Sep 30, 2019 8:31 pm
dualstow wrote:
Mon Sep 30, 2019 10:33 am
I hope Pug won’t mind if I add a WSJ link. Actually, the link in the OP is from the WSJ.

Fed Adds $63.5 Billion to Financial System in Repo Transaction
https://www.wsj.com/articles/fed-adds-6 ... 1569846438
Why would I mind?
I thought you always asked for a non-paywalled alternative. I’m probably thinking of someone else, then.
Under political pressure, Chick-Fil-A 🐓 chain cuts off the Salvation Army - wsj. :o
Vanguard treasury money market now yields 1.71%
compounded (last week, 1.72-3%)
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pugchief
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Re: Cracks emerging in money markets?

Post by pugchief » Tue Oct 01, 2019 2:06 pm

dualstow wrote:
Tue Oct 01, 2019 7:32 am
pugchief wrote:
Mon Sep 30, 2019 8:31 pm
dualstow wrote:
Mon Sep 30, 2019 10:33 am
I hope Pug won’t mind if I add a WSJ link. Actually, the link in the OP is from the WSJ.

Fed Adds $63.5 Billion to Financial System in Repo Transaction
https://www.wsj.com/articles/fed-adds-6 ... 1569846438
Why would I mind?
I thought you always asked for a non-paywalled alternative. I’m probably thinking of someone else, then.
Maybe I did. Always better for the masses. But I have a subscription now, which I probably didn't back then.
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shekels
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Re: Cracks emerging in money markets?

Post by shekels » Tue Oct 15, 2019 10:59 am

When is QE not QE?
The new-new-new plan.


https://wolfstreet.com/2019/10/11/10-ye ... ury-bills/
What do Christmas lights and Jeffrey Epstein have in common?
They don’t hang themselves.
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