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Blue Peter

Bandaid On A Ruptured Jugular

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http://wallstreetexaminer.com/?p=2434

by Lee Adler

Let’s talk about the Fed’s expansion of its securities lending program that the market is so excited about this morning. It seems to me that the market does not understand the implications of this action.

We’ll take this one step at a time.

What is the purpose of borrowing securities from your broker? It’s the same for Primary Dealers borrowing Treasuries from the Fed. Why do PDs borrow securities from the Fed? To sell them short.

The Primary Dealers are heavily short Treasuries at all times. They are heavily long all other debt securities simultaneously.The level of securities lending in recent months is unprecedented in all of human history, by an order of magnitude of 10.

...

Why is that? Because they were heavily short Treasuries and are being subject to the greatest Treasury short squeeze in history. Their only out was to borrow more securities from the Fed and short more into the market as the public clamor and panic for “safe” Treasury securities rose to a mad crescendo.

...

Is this a good sumamry of what the Fed is doing? Can anyone rewrite it in plain English? From being here for a while, I have some feel of what it's all about, but I don't have the full picture. Why are the Primary Dealers so short of Treasuries now? and what is this short squeeze? the price of Treasuries going up because everyone wants safety so they have to buy back the borrowed Treasuries at a higher price?

Peter.

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http://wallstreetexaminer.com/?p=2434

Is this a good sumamry of what the Fed is doing? Can anyone rewrite it in plain English? From being here for a while, I have some feel of what it's all about, but I don't have the full picture. Why are the Primary Dealers so short of Treasuries now? and what is this short squeeze? the price of Treasuries going up because everyone wants safety so they have to buy back the borrowed Treasuries at a higher price?

Peter.

Treasuries=tradeable=cash. Cash is what PDs are short of.

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  • 295 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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