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Fed POMO Schedule December 2011

Options Trading — Wed, 07 Dec 2011 16:12:37 +0000

Well here we are – last month of the year and the Fed POMO Schedule for December 2011 is here. It’s been a remarkable year for the Fed with literally trillions of Treasury debt on their books. Today’s release includes (as anticipated) an additional $8 billion in asset sales tacked on from the POMO operation which was canceled near the end of the November 2011 POMO schedule. This round of POMO operations is the next installment of Operation Twist – a combination of buying longer dated Treasuries and selling off shorter dated Treasuries from the Fed’s portfolio accumulated in earlier rounds of Quantitative Easing. As we look at this round of Operation Twist, we see the major purchases / cash injections occuring on / settling on December 6th ,16th, 19th, and 23rd with large sales / cash reductions settling December 5th, 9th, 15th, 22nd,and 29th. Be very wary of trading activity on December 22nd. The Fed has scheduled two $8 billion cash reductions that day – the largest draw-down I can recall in a single day. I imagine there will be some significant cash-raising activity at the Primary Dealers in order to fund those Treasury purchases (Fed asset sales). (Source: Federal Reserve) Across all operations [...]

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Fed POMO Canceled and Fed Intervention for ECB

Options Trading — Wed, 30 Nov 2011 17:33:18 +0000

So in an unprecedented move, the Fed canceled its sale of paper scheduled today via POMO operation twist. In and of itself that is a big deal but the even bigger news event has been the opening and use of swap lines between the Fed and Eurozone banks. The POMO sale was scheduled to pull $8billion of currency out of circulation in exchange for short term treasuries put back into the system. That alone would be a significant event (+8billion dollars needing a short term home is as large as any single day POMO day I can recall) however the opening of the swap lines appears to have released a floodgate of dollar liquidity into the market. It appears this has greased more than a few stuck wheels in Europe – as evidenced by the previous notation that futures markets were predicting a dollar squeeze. Short Term Dollar Liquidity Crunch May Be Over Near Term In the near term the swap lines will likely keep dollar funding pressures contained while the lines remain open however there is nothing to suggest that the pressure will cease. The over-indebted periphery nations solvency issues have clearly resulted in contagion spreading to core nation [...]

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Forex Day Trading Signal Service Sees a Market Drop

Options Trading — Wed, 23 Nov 2011 21:12:12 +0000

So it was all of 5 days ago a forex day trading signal service I use foresaw a number of forces aligning to predict a strengthening USD and as a result falling stock prices. Here we are all of 5 days later and the DJIA is sitting nearly 600 points lower. I am a happy man this afternoon. What Was Evident 5 Days Ago That Brought About a Stock Market Drop? I don’t honestly have access to the internal workings of the machine that produces the forex day trading signal market calls but suffice to say I read the signals and drew my own conclusions from them. I had initially warded off US residents from subscribing to the service given it is designed for a particular type of trading not allowed in the US but the SIGNALS themselves (not necessarily the trading platform itself) have already proven themselves incredibly valuable to those versed in markets and day trading. What the signals called for were for effectively long positions on the USD against a couple of key currencies in addition to a couple of calls in the futures markets which led me to conclude that the forex day trading signal service [...]

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Stock Market Rally Fading into the European Summit?

Options Trading — Fri, 21 Oct 2011 17:44:59 +0000

So is today's stock market rally fading into the European Summit this weekend? It sure looks that way to me. I'm watching the forex markets all day (kind of a habit... like breathing) and seeing a nice robust risk on pattern pretty much all morning - with a sprinkle of CHF risk off mixed in for good measure. Result: Dow Jones up nearly 200 points shortly after lunch.

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Fed POMO Schedule October 2011

Options Trading — Wed, 12 Oct 2011 18:58:15 +0000

In case you missed it here is the Fed POMO schedule for October 2011. Operation Twist – as it has been named in the media – has been quietly changing the consistency of the Fed’s balance sheet toward longer dated securities. The size of the overall operation is expected to be about $400billion and this first installment represents a little over 10% of that figure, or $44billion. Purchases are noted on the top of the chart with correspondent sales at the bottom of the table. For what it’s worth we’re looking at the 14th, 17th, 20th, 24th and 26th as the dates with the heaviest activity. Expecting melt-ups on those days once the funds have moved through the forex markets. (Source: Federal Reserve Bank of New York) Across all operations in the schedule listed below, the Desk plans to purchase approximately $44 billion and sell approximately $44 billion in Treasury securities over the month of October. purchase operations Operation Date1 Settlement Date Operation Type Maturity Range Expected Purchase Size October 3, 2011 October 4, 2011 Outright Treasury Coupon Purchases 02/15/2036 – 08/15/2041 $2.25 – $2.75 billion October 4, 2011 October 5, 2011 Outright Treasury Coupon Purchases 11/15/2019 – 08/15/2021 $4.25 – [...]

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Export Economy Economics: Boy Are They Dumb

Options Trading — Tue, 13 Sep 2011 18:44:44 +0000

Anyone who has followed export economy economics for a long time understands the basics: separate nations engage in trade of goods and services in exchange for money. Seems straight-forward enough doesn’t it? I’m sure you’ve noticed that the United States has run a trade deficit for (effectively all of my adult life), well, forever. Ever wonder what the implications of that continued trade deficit are? Modern Monetary Theory Meets Export Economy Economics Lately I was introduced to Modern Monetary Theory. Each day I have spent thinking about the meaning and implications of MMT with regard to my old understanding of forex markets, day trading, and how to make money trading stocks. I am pleased to say that having a decent grasp on Modern Monetary Theory has greatly clarified my understand of economics as observed in the real world today as opposed to the mysticism we are taught in Econ 101 in college (admittedly college was a long time ago for me however I have never stopped learning). Real Guys and Dumb Guys in a Two State Economic System The implications are clear: net export economy participants are either dumb, exploited, or (more often than not) both. How can this be? [...]

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Pricing in QE3

Options Trading — Tue, 30 Aug 2011 16:30:37 +0000

This is a short post on the pricing in of QE3 by the market. If you think I’ve been too quiet of late, you probably haven’t been following me on twitter. Twitter is a faster way to get messages and commentary out, so I have been tweeting what I’ve been seeing in stock and forex markets. While Fed Chairman’s Jackson Hole speech failed to produce an explicit committment to a further round of Quantitative Easing, it’s pretty clear from reading between the lines that “arms will be twisted” at the September meeting to approve another round, QE3, to keep the asset / treasury bubble inflated for another 6-9 months. What the Fed Statement Was Meant to Do The Fed’s Jackson Hole speech was designed to provide investors further reason to believe that the Fed intended to step in with further easing policies over and above what has already been done. How else to explain the dramatic drop initially with the statement but UP close on the day for the major indexes. We’ve also seen a steady upward rise since. Further, we’re seeing the market go from slightly red to green this afternoon, despite a dramatic fall in consumer confidence. Still [...]

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Wall Street Market Meltdown 2011

Options Trading — Tue, 09 Aug 2011 13:31:44 +0000

It had to happen eventually, and the Wall Street market meltdown of 2011 is finally here. How did you celebrate the event? Did you pick up a few shares of a blue chip stock or two or did you stay on the sidelines. Most traders/investors I’m reading stayed out of the way. I still am having a hard time believing how much trading gold online has increased and how much the price has jumped. I suppose I shouldn’t be, given the flight to safety that has been going on for the last couple of years (see gold against major foreign currencies). So much of the market meltdown on Wall Street yesterday is a symptom of the flaws of the fractional reserve banking system we employ globally. Ultimately at some point people with no sense get in charge of lending standards and suddenly people are borrowing to the maximum limit of the system until it breaks. Well, the system broke in September 2008 and the market bottomed in March 2009. Now here we are nearly three years later and few of the problems have been addressed with meaningful action. Rather, leaders have opted to put a new layer of paint on [...]

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Oil Prices and the Economy

Options Trading — Thu, 04 Aug 2011 15:39:21 +0000

Some thoughts on oil prices and the economy. Today we are watching the extension of a market melt down across risky asset items, something we had seen coming in part as a result of the end of the Fed POMO schedule. It honestly took a few more days than I thought it would to blow up the inflated stock market valuations but notheless here we are. Oil Prices and Economy Sinking Together While folks who rely on fuel oil for heating and gasoline production hope for further plunging of the price of oil, those of us in the business know that sinking oil prices means confidence is down and economic growth prospects are down as well. Oil producers know the economics of their business all too well, knowing that when they bite the hand that feeds them by keeping prices too high economic activity eventually falls off a cliff and takes oil prices with it. Oil Sheiks, Meet Cliff, ’cause that’s where we are. Failure of Leadership of Key Institutions to Blame It doesn’t take a rocket scientist to figure out that people the world over have given a vote of “no-confidence” in the political leadership of the United States, [...]

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Daily Forex Signals Indicating Late Turnaround

Options Trading — Mon, 18 Jul 2011 19:09:19 +0000

In typical late day action the daily forex market signals are indicating a turnaround post European exchange closings. The US dollar has weakened in the afternoon and we’re seeing strengthening in the risk on securities as per normal – AUD, CAD, NZD. Trading activity such as this really shouldn’t come as any surprize anymore given the thin trading activity in stock markets and (once the London and Frankfurt terminals shut off) in forex trading markets as well. What Market Signals Interest Us Today? We were caught up in watching the British police and government scramble to preserve dignity overseas today. Bringing down the house of the News of the World had unwelcome consequences, costing two top British police to lose their jobs, and frankly put into question the credibility of Prime Minister Cameron. It’s only a matter of time before the News of the World contagion spreads to the United States and law enforcement agencies here. My money is on Arizona and Texas being the likeliest places for corruption charges to land, but don’t count out Washington D.C. either. US Posturing Over Debt Ceiling Continues Newsflash: The US is going to raise the debt ceiling because they have no choice. [...]

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