16 replies to this topic

[greek179]

Cool, then what is the simple reason they started the rumor-and who were "they" ? And, who was the "they" that were so acredited and believable-that people would risk millions and millions on their word? [/quote] Probably those big traders that were short started the whole thing, but another thing people forget is that it has been estmated that 50 to 70% of the trading volume is black box programs with different algorithms, and they get triggered one after another as the market moves. This is more likely the cause of dramatic moves in both directions.

[arbman]

Kisa-I always monitor Temporary Open Market Operations, is there a better way for me to do it? TIA.

I don't understand much either, but TOMOs and POMOs are the new money. There is also the existing money that the Fed keeps in their reserves (SOMA).

So, I also look at the securities lending activity. That's the recirculated money back into the system as far as I understand. You should check how the SOMA and % of total outstanding in the soma holdings are changing if you really want to understand the credit conditions and inflation, I don't...

Currently the Fed is carrying a huge SOMA with outstanding bonds, as of Aug 1st 10-30% of the bonds in various maturities in the SOMA were unused and they are loaned back to the system to maintain price stability, like they are doing now...

The Fed publications explain that the large SOMA is inflationary --evident from the USD, but it is very convenient to prevent the price shocks --evident from the rally out of the current sub-prime crisis.

- kisa


btw, the change in the SOMA is about 45% from last year, talk about no inflation...

[thespookyone]

Thx Kisa! One more link in the chain for me, I really appreciate it. Spooky

[pdx5]

I hate to burst your bubble y'all but today's action was all funnymentals The magnificent jump in earnings (25%) of CISCO which is the 6th largest component was the initial force to push the market up. Then a rumor hit the Street that Goldman Sachs had a serious problem on hand and caused the market to tank immediately. However GS quickly declared that they had no such problem and the market took off again. Again, the Fed can not CREATE money out of thin air. If that was true, we would have ZERO budget deficits every year. They have no such mandate from the congress. The only power they have is to sell bonds/loans to banks and foreign buyers etc etc which all have to be paid back WITH interest. So long as there are people willing and ABLE to borrow, Fed can create liquidity. But if the demand for loans slacks off, both domestic and foreign then Fed is pretty much without options. This is why they can't drop the interest rates on bonds because China and Others won't want them with a dropping dollar AND lower returns. The housing will have to recover on it's own, in the meanwhile.

[thespookyone]

Well, in a funnymental sense-my guess is GS is holding a nice sized bag of bad paper-next time it will probably be more than just a rumor.

[Rogerdodger]

GS, GS, GS!
You guys keep mentioning GS.
What is it?

Government Savior?

April post:
"We've not quite got to the stage where the computer programs are starting rumours," says one trader. "But some of the systems out there will pick up on any increase in trading volumes that come about as a result of a half-baked rumour.

[pdx5]

Well, in a funnymental sense-my guess is GS is holding a nice sized bag of bad paper-next time it will probably be more than just a rumor.

ZACTLY! Just a matter of time. And my mother always told me,
patience is a virtue