Tag: statistics

Stay Long Stocks Until...

...the Fed stops buying Bonds. It's as simple as that. The Fed has committed to purchasing $45 billion in treasuries and $40 billion in MBS per month for the foreseeable future. That's a run rate of ~1 trillion a year! The "Fed put" is real and I can prove it. Look at the following chart. US Federal Reserve Total Assets data by YCharts The plot starts on 11/25/2008 or the beginning of the first Quantitative Easing program (QE1). We can see there is a clear relationship between the Federal Rese

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Is Trading the FED's POMO Schedule Profitable?

I often consider the market's distortions that are or can be created by its participants. Arguably, the most important market player is the Federal Reserve. For years the FED as been injecting liquidity into the financial system through its Permanent Open Market Operations (POMO). I'm not going to delve into the purpose of these multibillion dollar transactions as others have covered this extensively. Instead I ask a simple question. The FED makes their tentative POMO schedule public beforehand.

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