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What's up with the Repo rate?

Discussions about the economic and financial ramifications of PEAK OIL

Re: What's up with the Repo rate?

Unread postby Revi » Fri 08 Nov 2019, 13:07:53

I guess the market's way up lately, so that's something. Everything's fixed this week!
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Re: What's up with the Repo rate?

Unread postby Outcast_Searcher » Fri 08 Nov 2019, 16:04:45

sparky wrote:.
I'm not so sure about the importance of the trade deals ,
they certainly matter but seems to be used as an excuse to move the stock markets
in a time of very low return on money investment , money flow to shares
the returns are slim but better than lending money
so the stock market valuations are just financial refuge for lone desperate trillions of bucks

Well, certainly they don't matter if they're not real. It would mainly be about helping confidence that reasonable growth is feasible going forward.

At least if China isn't making more short term threats re trade, that's better than things have been with them.

Unfortunately, as per usual, how can anyone have any confidence over what Trump says when the story changes daily in some cases, or what he says defies objective reality in many others?

I'll give him a break on the things open to political interpretation -- since all "successful" politicians play the spin game. But on the rest, not so much.

The stock market will end up where it ends up, re the overall economy and confidence. If the recent turmoil re all the negative trade news and fears hadn't happened, we probably would have set the stock market records earlier, but could well have ended up in the same place.

There's FAR too much fixation over day to day and even month to month stock market movements, IMO. The markets are trying to digest a LOT of information, often conflicting information, and they're also trying to look 6 to 12 months ahead. Little wonder the short term meanderings are so random.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: What's up with the Repo rate?

Unread postby evilgenius » Sat 09 Nov 2019, 12:12:45

The general trend, over a temporary move in one direction or another, is what matters. That's precisely why I am worried about the anti-globalization of Trump. Globalization, and the actual US dominance of the result rather than the perceived failure, have caused much of the stock market run up that everybody is pointing to when they cite the markets as proof that everything is well. Will there be a change? Will that change come about because of the perception of failure, or some new position that seeks to curry favor with those who feel that way, but still embraces globalization?
Will we pull back from the world we are on the cusp of achieving? Even slightly altering its approach could be dangerous for the US, as there really is talk of abandoning the dollar as the world's reserve currency https://www.cnbc.com/2019/10/31/de-dollarization-russia-china-eu-are-motivated-to-shift-from-using-usd.html?&qsearchterm=reserve%20currency. That's much easier to do, if other countries perceive that the US no longer takes the stance that open markets are the best thing for it, but, instead, offers some sort of compulsion that incites resentment among even historical allies.
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Re: What's up with the Repo rate?

Unread postby Outcast_Searcher » Sat 09 Nov 2019, 12:53:33

evilgenius wrote:The general trend, over a temporary move in one direction or another, is what matters. That's precisely why I am worried about the anti-globalization of Trump. Globalization, and the actual US dominance of the result rather than the perceived failure, have caused much of the stock market run up that everybody is pointing to when they cite the markets as proof that everything is well. Will there be a change? Will that change come about because of the perception of failure, or some new position that seeks to curry favor with those who feel that way, but still embraces globalization?
Will we pull back from the world we are on the cusp of achieving? Even slightly altering its approach could be dangerous for the US, as there really is talk of abandoning the dollar as the world's reserve currency https://www.cnbc.com/2019/10/31/de-dollarization-russia-china-eu-are-motivated-to-shift-from-using-usd.html?&qsearchterm=reserve%20currency. That's much easier to do, if other countries perceive that the US no longer takes the stance that open markets are the best thing for it, but, instead, offers some sort of compulsion that incites resentment among even historical allies.

But surely the vast majority of people can see that Trump and most of his antics are an anomaly. Of course, electing someone like Warren who wants to see how rapidly she can steal wealth to buy the election is just a different sort of catastrophe, re much of what has made America successful.

So, let's assume America's days of global dominance are behind it, and China takes over: in terms of economic power, military power, and having the global reserve currency. (Given current trends, the question isn't if, but when).

I don't see why that's so "dangerous" for America. If America focused on spending for things like infrastructure and education vs. a gigantic military to "police the world", that would seem like a good thing for America. As long as the US maintains its nuclear arsenal and the will to use it in self defense, it's not like China is going to try to militarily conquer the US. (And in fact, primarily maintaining the capability could be the bulk of the US defense spending, at something like 20 to 25% of what it spends today, including a "normal" level or overall defense). If China did try to strongly attack the US and its top 50 or 100 cities get nuked, so much for China's dominance. And if China wants to pay a $trillion or more annually to do things like police the Middle East -- let them "enjoy" that role of global leader.

Despite endless concerns on the net re the dollar, currency strength is about trust at the end of the day, and the FX markets do trade over $5 trillion a day among all the major currencies. I have YET to see a convincing argument for why in the modern era, it matters much at all whether the US dollar is the world's reserve currency. Once the initial surprise induced volatility in the dollar passes, SO WHAT? I think all the histrionics over that are just another way for fast crash doomers to tell themselves there's yet another reason to expect "doom". If the dollar ends up, say, 20% or 30% weaker, it's not doom, it means foreign goods are somewhat more expensive.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: What's up with the Repo rate?

Unread postby rockdoc123 » Sat 09 Nov 2019, 13:10:56

If China wants to pay a $trillion or more annually to do things like police the Middle East -- let them "enjoy" that role of global leader.


they most certainly will not elect to do that. What I witnessed in Africa over the years was Chinese national companies with zero regard for human rights, the environment or anything else that many believe are essential. As partners, they refused to participate in humanitarian investments, traded weapons for opportunities, blatantly stole technology and were more than willing to put their own people at risk. Maybe they are gradually changing and becoming more "responsible" but I acknowledge their culture is a lot different from our own, very hierarchical. I just can't see them stepping up as World Police unless there was something in it for them (which is a danger in itself).

So the US and Nato can decide to back off all responsibility and then I think it will be every megalomaniac dictator for himself. In keeping with what I think Trump is after which is insular countries and walking away from globalization. Good or bad depending on your perspective I suppose.
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Re: What's up with the Repo rate?

Unread postby Outcast_Searcher » Sat 09 Nov 2019, 14:04:07

rockdoc123 wrote:
If China wants to pay a $trillion or more annually to do things like police the Middle East -- let them "enjoy" that role of global leader.


they most certainly will not elect to do that. What I witnessed in Africa over the years was Chinese national companies with zero regard for human rights, the environment or anything else that many believe are essential. As partners, they refused to participate in humanitarian investments, traded weapons for opportunities, blatantly stole technology and were more than willing to put their own people at risk. Maybe they are gradually changing and becoming more "responsible" but I acknowledge their culture is a lot different from our own, very hierarchical. I just can't see them stepping up as World Police unless there was something in it for them (which is a danger in itself).

So the US and Nato can decide to back off all responsibility and then I think it will be every megalomaniac dictator for himself. In keeping with what I think Trump is after which is insular countries and walking away from globalization. Good or bad depending on your perspective I suppose.

All that sound reasonable, given some of China's known behavior.

Now, a rational world community could try to work together, and basically have some sort of global military and economic truce/force which would make it highly unpalatable for at least major players to do really egregious things, given the economic and potential military consequences.

However, given the cluster-f*** the UN mostly is in reality, and how irrational much of the world is, it's not like I expect that any time soon.

As a US citizen, I'd be all for the US maintaining its role as global policeman -- but I'd want the various groups being protected to pay for those services. And I realize that figuring out the tab for, say, middle east oil policing is easier than for many of the other roles we play in force projection.

And yes, if we wanted much of NATO et al to play along with that sort of payment plan, it's a huge ask if we don't elect POTUSes more credible than Trump on the "playing well with others" front.

More and more, as I contemplate the global situation, I can imagine Toffler saying, "See? Future shock! I told you so.") :idea:
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: What's up with the Repo rate?

Unread postby Yoshua » Wed 13 Nov 2019, 01:56:55

"FED'S HARKER SAYS ONE LESSON OF REPO VOLATILITY IS FIVE FINANCIAL INSTITUTIONS OWN ABOUT 80% OF RESERVES AND WERE NOT WILLING TO LEND"
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Re: What's up with the Repo rate?

Unread postby Outcast_Searcher » Wed 20 Nov 2019, 13:49:03

Yoshua wrote:"FED'S HARKER SAYS ONE LESSON OF REPO VOLATILITY IS FIVE FINANCIAL INSTITUTIONS OWN ABOUT 80% OF RESERVES AND WERE NOT WILLING TO LEND"

That's a good point. Remember all the squawking about TBTF banks and how congress was going to "fix" that problem?

Then everyone goes back to sleep, and the problem is just as bad if not worse, but we now have new shiny regulations that are supposed to make everyone feel better.

This type of thing is my main objection to the liberal assumption that more government and regulations is always going to make things better and always worth the money spent.

That's no more true than the conservative assumption that cutting taxes is always going to make things better.

Reality is far more complicated than such simple rules of thumb (much less "truths") can come close to dealing with.

...

I'd be all for fixing the TBTF problem by breaking up the largest financial institutions and having maximum size rules. But in reality, that's not going to happen because politicians being re-elected is job one for them, no matter what they prattle about taking care of the voters, etc.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: What's up with the Repo rate?

Unread postby sparky » Thu 21 Nov 2019, 17:00:38

.
It is now announced that the fed will be active in the repo market for the foreseeable future
https://www.cnbc.com/2019/11/20/the-fed ... ssues.html

Basically it's a government take over of a previously free market operation
the fed is putting about 100 Billions + per week as chips on the table with every indication they are ready to put as much and more
while this is not a gift but a stake , the financial institutions are ecstatic ,
stuff free market virginity , give us socialism with a bulging purse

https://www.politico.com/news/2019/11/1 ... ets-071142

What does this all means , I sure don't know
one can suspect things are not working as they should , maybe the lending market is gripping a bit
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Re: What's up with the Repo rate?

Unread postby EdwinSm » Fri 22 Nov 2019, 01:42:09

From the first link in the above post
However, markets have treated it to some extent as a “QE4” type of operation.


So here we have a mainstream news conversion that the not-QE is a form of QE.

What I find more disturbing is that a month and a half after the Repo rate spike, the FED still does not believe that the problem is sorted out and that they need to keep intervening in that market to prevent greater problems.
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Re: What's up with the Repo rate?

Unread postby Outcast_Searcher » Fri 22 Nov 2019, 17:43:45

EdwinSm wrote:From the first link in the above post
However, markets have treated it to some extent as a “QE4” type of operation.


So here we have a mainstream news conversion that the not-QE is a form of QE.

What I find more disturbing is that a month and a half after the Repo rate spike, the FED still does not believe that the problem is sorted out and that they need to keep intervening in that market to prevent greater problems.

And yet they've said they're going to expand the balance sheet back to a certain extent, so this certainly isn't new news. They're doing what they'd planned to address the issue. Looking at the rates, which continue to smoothly fall to the lowest they've been in the 18 months shown by expanding the chart as far as it will for me. (See blue line in the chart at the bottom for the SOFR link below).

Now, we just had a negative QE, reducing the balance sheet by roughly $700 billion in the 18 or so months before this. Now they're undoing part of that because they decided they went too quickly. If calling QE, then negative QE then QE (size to be determined) QE makes the doomers feel better, dandy, but it's clearly not the repetitive QE's spawned by the great recession mess -- at least it certainly isn't yet.

https://apps.newyorkfed.org/markets/autorates/sofr

The closely watched SOFR has been below 1.6% for all of November, and right at 1.7% at the 99th percentile of borrowers -- trendless as a table top.

....

Where's all the hyperinflation, chaos, and ruin the clowns like those Armageddon were citing re Youtube videos, which was "certain" to arrive by November?

Somehow context and a sense of reality and perspective just doesn't seem to penetrate the skull of the hand wavers.

Oh, and in the real world, if TPTB aren't going to come to grip with the TBTF bank problem and high deficits are going to persist, things like this are going to be necessary. We're lucky things are as stable as they are, but who needs perspective when we can endlessly play Angry Birds?

When we have ACTUAL meaningful inflation, persistent and getting to the teens like in the 70's, then be sure and remind us because THAT would be a very bad sign indeed -- especially if the beltway doesn't wake up and minimize the size of the deficits.

As it is, the US inflation rate is persistently below the Fed target of 2% in 2019. Should we be all "alarmed" about that?

https://www.google.com/search?q=us+infl ... e&ie=UTF-8
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: What's up with the Repo rate?

Unread postby sparky » Fri 22 Nov 2019, 21:05:14

"Somehow context and a sense of reality and perspective just doesn't seem to penetrate the skull of the hand wavers."

exactly porn-doomers have one basically valid idea and push it to the extreme edge and beyond

there always was guys with placard walking the sidewalk with "the end is night"
now the net especially you-tube is full of click-baits pronouncement
my favorite is financial end of the world "next quarter" they have been around for decades
of course this could happen ,it's only one of many more probable outcomes
certainly not because the prophet of doom know anything about anything
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Re: What's up with the Repo rate?

Unread postby Outcast_Searcher » Sat 23 Nov 2019, 04:00:52

sparky wrote:my favorite is financial end of the world "next quarter" they have been around for decades
of course this could happen ,it's only one of many more probable outcomes
certainly not because the prophet of doom know anything about anything

Except, apparently marketing that works, or they'd stop paying for the stupid ads.

But yeah, these clowns like "Stansberry Research" have played such games for years and literally, in year N + 1, will just change the date to the next year, and run the SAME AD. Wow, if only my career had been so easy. :roll:

It's enough to make one wish Karma was actually a thing in some cases.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: What's up with the Repo rate?

Unread postby Revi » Tue 26 Nov 2019, 10:41:02

The M2 says the Fed issuing a lot of money just in time for X-mas! Thanks Santa!

https://www.silverdoctors.com/headlines ... onth-high/
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Re: What's up with the Repo rate?

Unread postby Outcast_Searcher » Thu 28 Nov 2019, 02:23:07

Revi wrote:The M2 says the Fed issuing a lot of money just in time for X-mas! Thanks Santa!

https://www.silverdoctors.com/headlines ... onth-high/

And yet, the short term loans are NOT adding that magnitude, or anything close to it, to the Fed balance sheet, despite the implication otherwise. Of course, these clowns want to sell PM's, not be honest about what is happening in context. Gee, why am I not surprised?

I find it amusing that in this thread, clowns like this are cited by the doomers, and the folks that want to understand what is really happening (i.e. not promote an agenda, but just understand what is happening re the US and global economy) cite the Fed.

(Yeah, I know, here come the fast crash doomer conspiracy theories re the Fed, the MSM, and anyone else not buying their narrative of rapid doom, right on schedule). :shock:

Over the past month, re the latest weekly data available from the Fed, the balance sheet grew from 4.017 $trillion on Oct. 23rd to 4.079 $trillion as of Nov. 20th, which my math says is $62 billion for those 4 weeks.

Note how silly that makes the $103 billion figure cherry picked for one day look, which they "JUST HAPPENED" to place and word in a way to be easily misunderstood to mean balance sheet growth instead of total very short term loans made. :roll:

https://www.federalreserve.gov/releases/h41/

And the lending rates re the Fed to make the loans continues to drop. Not exactly a sign of panic, much less distress.

https://apps.newyorkfed.org/markets/autorates/sofr

....

But hey, such outfits have been braying many "reasons" to expect hyperinflation and economic doom and "BUY GOLD" constantly for the 35ish years I've been paying attention, and I'm certain, decades before that, and yet gold and silver grow at about the rate of inflation over time, so of COURSE, you should believe them THIS TIME, because what could possibly go wrong? :o

And, gold and silver prices have been trending DOWN since the excitement re the rate spike in Sept. Why are they so sanguine if there is so much doom from the Fed? :?:

...

Don't get medical advice from a horoscope. Don't get financial advice from these guys. Seriously.
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