nuckin_futz Posted March 23, 2020 Share Posted March 23, 2020 (edited) Fed establishes TALF, to do open-ended Treasuries and MBS purchases in the amounts needed Mon 23 Mar 2020 12:02:17 GMT Fed launches more measures to support the economy and transmission of monetary policy Will buy Treasuries, MBS in the amounts needed to ensure smooth market functioning and transmission of monetary policy Establishes two new facilities for lage employers One facility is for new bond, loan issuance; one is for outstanding corporate bonds Establishes term asset-backed loan facility (TALF) TALF backed by student, auto, credit card and SBA-backed loans among other assets Will soon announce 'main street business lending program' to support SMEs Daily and term repo rates to be reset to offering rate of 0% For starters, the Fed will purchase $75 billion of Treasuries and $50 billion of agency MBS each day this week. The Fed is practically going to reach the point where they will be buying everything in the market at this stage. The full press release can be found here. Treasury yields have fallen sharply on the back of the announcement here with 10-year yields dragged to 0.72% from 0.80% earlier. ************************ And there you have it. The Fed is buying EVERYTHING. BUY THE ****ING DIP. MBS = Mortgage backed securities Edited March 23, 2020 by nuckin_futz 3 Link to comment Share on other sites More sharing options...
nuckin_futz Posted March 23, 2020 Share Posted March 23, 2020 The Fed has just taken all risk out of banking and lending Mon 23 Mar 2020 12:22:58 GMT This move is unprecedented The Fed is buying everything. Today's announcement is unprecedented in both size and scope. It is a complete perversion of market functioning and a nuclear bomb more than a bozooka. It basically renders banking meaningless and puts all the risk on the Fed. It's a complete gift to lenders. You can still loan people money at 20% on a credit card but the package up the debt and sell it to the Federal Reserve. In the Treasury, agency and MBS market, pricing doesn't matter anymore. US 10-year yields are down 10 bps on the announcement to 0.70%. The Fed has simply said it will buy unlimited amounts of government-backed bonds in "amounts needed to support smooth market functioning and effective transmission of monetary policy." We have no idea if that means 1% yields or 0% further out the curve. Not only that, but 'large employers' -- corporate America -- will buy newly-issued bonds and in the secondary market up to 4 years with no interest or principal for 6 months. So essentially, Exxon can launch a bond and sell it directly to the Fed. What's especially interesting about this is that it's only open to companies with investment grade credit ratings. However there is are hundreds of companies right on the cutoff to junk that should be downgraded any day. Without the Fed buying, that cliff becomes even steeper. Finally, the Fed said it will soon establish a "Main Street Business Lending Program" to make similar loans to small-and-medium sized businesses. ***************** RIP Capitalism. Link to comment Share on other sites More sharing options...
Warhippy Posted March 23, 2020 Share Posted March 23, 2020 1 hour ago, nuckin_futz said: The Fed has just taken all risk out of banking and lending Mon 23 Mar 2020 12:22:58 GMT This move is unprecedented The Fed is buying everything. Today's announcement is unprecedented in both size and scope. It is a complete perversion of market functioning and a nuclear bomb more than a bozooka. It basically renders banking meaningless and puts all the risk on the Fed. It's a complete gift to lenders. You can still loan people money at 20% on a credit card but the package up the debt and sell it to the Federal Reserve. In the Treasury, agency and MBS market, pricing doesn't matter anymore. US 10-year yields are down 10 bps on the announcement to 0.70%. The Fed has simply said it will buy unlimited amounts of government-backed bonds in "amounts needed to support smooth market functioning and effective transmission of monetary policy." We have no idea if that means 1% yields or 0% further out the curve. Not only that, but 'large employers' -- corporate America -- will buy newly-issued bonds and in the secondary market up to 4 years with no interest or principal for 6 months. So essentially, Exxon can launch a bond and sell it directly to the Fed. What's especially interesting about this is that it's only open to companies with investment grade credit ratings. However there is are hundreds of companies right on the cutoff to junk that should be downgraded any day. Without the Fed buying, that cliff becomes even steeper. Finally, the Fed said it will soon establish a "Main Street Business Lending Program" to make similar loans to small-and-medium sized businesses. ***************** RIP Capitalism. But as for right now, small businesses in America are at risk of total collapse, including the restaurant industry which has stated it has less than a week before up to 20% of its businesses close, never to reopen. But glad corporate America is currently ok on the back of US taxpayer back fed printing Link to comment Share on other sites More sharing options...
Shift-4 Posted March 23, 2020 Share Posted March 23, 2020 34 minutes ago, Warhippy said: But as for right now, small businesses in America are at risk of total collapse, including the restaurant industry which has stated it has less than a week before up to 20% of its businesses close, never to reopen. But glad corporate America is currently ok on the back of US taxpayer back fed printing 2 hours ago, nuckin_futz said: Fed launches more measures to support the economy and transmission of monetary policy Will soon announce 'main street business lending program' to support SMEs But I have no idea what this looks like. Link to comment Share on other sites More sharing options...
nuckin_futz Posted March 23, 2020 Share Posted March 23, 2020 4 minutes ago, Shift-4 said: But I have no idea what this looks like. Neither do they. They're making it up as they go along. Does any of this look organized? Link to comment Share on other sites More sharing options...
Shift-4 Posted March 23, 2020 Share Posted March 23, 2020 1 minute ago, nuckin_futz said: Neither do they. They're making it up as they go along. Does any of this look organized? When I read the line I first thought bull$&!# but hopefully they do put something in place. No way it works as well as the aid for the big boys because there is already a market for them. Link to comment Share on other sites More sharing options...
Warhippy Posted March 23, 2020 Share Posted March 23, 2020 16 minutes ago, Shift-4 said: But I have no idea what this looks like. Trudeau said that about Canada but we're a week later and as a small sole proprietor I'm still in the dark Link to comment Share on other sites More sharing options...
I.Am.Ironman Posted March 23, 2020 Share Posted March 23, 2020 @nuckin_futz That video made me laugh more than it should have.. But what I don't understand is after the Fed news why the markets (and banks) are still all down. One would think this was good news? 1 Link to comment Share on other sites More sharing options...
Gurn Posted March 23, 2020 Share Posted March 23, 2020 Hey, this sounds like socialism. 1 Link to comment Share on other sites More sharing options...
I.Am.Ironman Posted March 23, 2020 Share Posted March 23, 2020 1 hour ago, Warhippy said: Trudeau said that about Canada but we're a week later and as a small sole proprietor I'm still in the dark My friend said those details come out in April, I haven't actually checked so he could be wrong but that's what I heard.... I'm in the same boat. Link to comment Share on other sites More sharing options...
Shift-4 Posted March 23, 2020 Share Posted March 23, 2020 10 minutes ago, I.Am.Ironman said: @nuckin_futz That video made me laugh more than it should have.. But what I don't understand is after the Fed news why the markets (and banks) are still all down. One would think this was good news? I'm going to suggest they are down because of Trump's tweet about back to business in one week. Fed tries one thing, dip$&!# driving the bus goes on a ridiculous tangent Link to comment Share on other sites More sharing options...
nuckin_futz Posted March 23, 2020 Share Posted March 23, 2020 (edited) 24 minutes ago, I.Am.Ironman said: @nuckin_futz That video made me laugh more than it should have.. But what I don't understand is after the Fed news why the markets (and banks) are still all down. One would think this was good news? There are still some pretty big problems facing the market. The headlines regarding the virus will be unrelenting for sometime. As will be the economic headlines. This is the week we will see the impact of the virus start to show itself in the North American economic data. Apart from that, the market still needs to deleverage. Think of the market as a business that has been flooded. There is a lot of mess to clean up before the grand re-opening. As for banks, they are going to have a tough slog in a zero interest rate environment. Also, keep in mind the Federal Reserve launched QE1 in late Nov 2008, the markets did not bottom out until Mar 2009. Then they did not look back for years. Edited March 23, 2020 by nuckin_futz 1 Link to comment Share on other sites More sharing options...
Russ Posted March 23, 2020 Share Posted March 23, 2020 2 hours ago, Warhippy said: But as for right now, small businesses in America are at risk of total collapse, including the restaurant industry which has stated it has less than a week before up to 20% of its businesses close, never to reopen. But glad corporate America is currently ok on the back of US taxpayer back fed printing Saw a good point on twitter where the cruise ships are trying to get bailouts yet all 5 companies they listed, not a single one of them were based in USA. They were all panama and other carribean companies but they want the USA to bail them out. How the hell do these massive ass companies think its justifle to want tax payers to bail them out with BILLIONS. Seriously why are they having so much difficulty keeping money in the bank when they keep producing more massive cruise ships. The bailouts are horse $&!# and like you said all these little restaurants are going to go out of buisness. We have one in Chilliwack that I absolutely love, been going there every Sunday for 6+ years now, I will be bummed really bad if they go out. Nice little 10ish table place, amazing people that work there and it'll be sad if places like those go away while the IHOPs somehow get bailed out and stay in buisness. 1 1 Link to comment Share on other sites More sharing options...
Boudrias Posted March 23, 2020 Share Posted March 23, 2020 With the falling CDN$ to 0.68 we can only imagine how cost of living will go up. Sustained flu levels will start to erode supply chains. Markets are grasping at any positives but are getting mostly negatives. My standard rant about Canadian dependence on commodity income will impact us significantly. Ability to finance will be a big concern. When you talk about funding companies so they don’t go bankrupt it is about retaining a base for re-employment. The hard decisions will be which ones should be saved if that is what is required. To me it should be essential industry and it scares me to have politicians making those decisions. Cruise ships no. Some airlines no. Many companies have their debt repayments staggered over many years and are not in immediate trouble unless their lender is. So so much of this is a confidence issue and trying to stave off panic. Link to comment Share on other sites More sharing options...
aGENT Posted March 23, 2020 Share Posted March 23, 2020 1 hour ago, Russ said: Saw a good point on twitter where the cruise ships are trying to get bailouts yet all 5 companies they listed, not a single one of them were based in USA. They were all panama and other carribean companies but they want the USA to bail them out. How the hell do these massive ass companies think its justifle to want tax payers to bail them out with BILLIONS. Seriously why are they having so much difficulty keeping money in the bank when they keep producing more massive cruise ships. The bailouts are horse $&!# and like you said all these little restaurants are going to go out of buisness. We have one in Chilliwack that I absolutely love, been going there every Sunday for 6+ years now, I will be bummed really bad if they go out. Nice little 10ish table place, amazing people that work there and it'll be sad if places like those go away while the IHOPs somehow get bailed out and stay in buisness. Maybe THIS will finally get more people to realize how important it is to support local business, domestic produced products and business owners instead of racing to the bottom at your local Walmart or dollar store for the cheapest borderline slave made crap you can buy. It's it really 'more expensive' to buy higher quality, locally produced goods from those stores when your neighbor can no longer afford to buy products/services from YOUR place of work? 1 Link to comment Share on other sites More sharing options...
Russ Posted March 23, 2020 Share Posted March 23, 2020 29 minutes ago, aGENT said: Maybe THIS will finally get more people to realize how important it is to support local business, domestic produced products and business owners instead of racing to the bottom at your local Walmart or dollar store for the cheapest borderline slave made crap you can buy. It's it really 'more expensive' to buy higher quality, locally produced goods from those stores when your neighbor can no longer afford to buy products/services from YOUR place of work? I try and pickup local, probably don't do it as much as I should but I atleast try. Link to comment Share on other sites More sharing options...
aGENT Posted March 23, 2020 Share Posted March 23, 2020 9 minutes ago, Russ said: I try and pickup local, probably don't do it as much as I should but I atleast try. Wasn't directed specifically at you, but good on you. We're ignorant short sighted animals unfortunately. Hopefully this is a wake up call to some folks on a great many things. Link to comment Share on other sites More sharing options...
Tortorella's Rant Posted March 23, 2020 Share Posted March 23, 2020 So.. are you guys buying anything in any large quantity? I have over 10k sitting around. I listened to the WS webinar just now and they said this: Lump sum vs. dollar cost averaging. Lump sum 2/3 of the time can leave you better off than dollar cost averaging say over 12 months. Tends to be the theoretically better strategy. Flip side the regret seeing a decline in the market. No right or wrong answer. Buying opportunity? Buying the dip? Holding cash and waiting for value to dip can reduce risk premium. Put your money in, hold your ground. I would love to take advantage of cheap stocks. However, I have no idea what housing will be like next year so I can't make an informed decision either way because I would also like to save for a house. Link to comment Share on other sites More sharing options...
Shift-4 Posted March 23, 2020 Share Posted March 23, 2020 8 hours ago, nuckin_futz said: H M M M 1 Link to comment Share on other sites More sharing options...
inane Posted March 23, 2020 Share Posted March 23, 2020 (edited) 33 minutes ago, Tortorella's Rant said: So.. are you guys buying anything in any large quantity? I have over 10k sitting around. I listened to the WS webinar just now and they said this: Lump sum vs. dollar cost averaging. Lump sum 2/3 of the time can leave you better off than dollar cost averaging say over 12 months. Tends to be the theoretically better strategy. Flip side the regret seeing a decline in the market. No right or wrong answer. Buying opportunity? Buying the dip? Holding cash and waiting for value to dip can reduce risk premium. Put your money in, hold your ground. I would love to take advantage of cheap stocks. However, I have no idea what housing will be like next year so I can't make an informed decision either way because I would also like to save for a house. BAM.A BPY.UN Both dropped like mad but are very solid long term. Edited March 23, 2020 by inane Link to comment Share on other sites More sharing options...
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