Welcome to our New Forums!

Our forums have been upgraded and expanded!

Welcome to Our New Forums

  • Our forums have been upgraded! You can read about this HERE

Fed Bailout FAILS even with 700 billion injection and zero interest rates

Jack

New member
Joined
Oct 30, 2018
Messages
3,966
stockmarketcrash.jpg

A massive interest rate cut and $700 billion worth of debt purchases by the Federal Reserve was not enough to stabilize the stock market.

The Federal Reserve took massive emergency action Sunday to try to help the economy withstand the coronavirus by slashing its benchmark interest rate to near zero and saying it would buy $700 billion in Treasury and mortgage bonds.

The Fed’s surprise announcement signaled its rising concern that the viral outbreak will depress economic growth in coming months, likely causing a recession, and that it’s poised to do whatever it can to counter the risks. It cut its key rate by a full percentage point to a range between zero and 0.25%.

The central bank said it will keep its rate there until it is “confident that the economy has weathered recent events.”

The Fed will buy at least $500 billion of Treasury securities and at least $200 billion of mortgage-backed securities. This amounts to an effort to ease market disruptions that have made it harder for banks and large investors to sell Treasuries as well as to keep longer-term borrowing rates down.
https://apnews.com/cf1d8e5487eee5e9eb649f0c6700ded6

The Fed's quarantative easing has failed.

After last week's miserable Monday moves, we are running out "black Monday" designations, so we'll keep today's Ides of March action simple, especially since it is likely to recur for many weeks to come: just call it the Ides Of March Mondays Massacre.

With S&P futures promptly plunging 5% limit down at the Sunday reopen of electronic trading after the Fed quite literally "blew" its largest emergency intervention ever, which instead of calming markets only exacerbated the sense of panic and dread

The question, however, is whether the market will be halted fully and indefinitely to prevent further selling and to "own the shorts" whether due to continued selling or by presidential decree. We will find out in a few hours, and until then here are the appropriate circuit breaker levels. If the S&P drops to 2,168 it may be all over.

2521.25 (down 7%)
2358.59 (down 13%)
2168.82 (down 20%)

As Bloomberg notes, Monday’s surge sent VIX futures beyond their highs of last week, which included several limit-down pauses to U.S. stocks and the S&P 500’s biggest tumble since the crash on Black Monday in 1987.

Investors have been unable to digest a ceaseless newsflow of companies shutting operations, countries sealing borders and governments devising targeted rescue plans. The Fed cut its key interest rate by a full percentage point to near zero and said it will boost its bond holdings by $700 billion. The Bank of Japan moved to accelerate asset purchases, doubling the amount of equity ETFs the central bank buys every year to 12 trillion.

European stocks were not halted but the carnage was just as bad, with all sectors tumbling, while the European Stoxx 600 Banks Index plunged 7.8% Monday, falling below its low of 2009, in the aftermath of the Global Financial Crisis. Banks have underperformed the wider market as European countries are increasingly going into lock-down mode.

Predictably, debt insurance costs for European banks and sovereigns rose sharply on Monday, shrugging off massive rate-cutting moves and liquidity injections by the U.S. Federal Reserve and other global central banks over the weekend.

Australian equities fell almost 10%, the most since 1992, even after the Reserve Bank of Australia said it stood ready to buy bonds for the first time - an announcement that sent yields tumbling.

The Federal Reserve on Sunday cut its benchmark rate by a full percentage point to near zero and will boost its bond holdings by $700 billion to cushion the U.S. economy from the coronavirus outbreak
Credit markets reeling from their worst week since the global financial crisis weren’t impressed by a dramatic rate cut by the Federal Reserve, as investors including Pacific Investment Management Co. called for governments to do more to avert a meltdown
Italy’s government will meet Monday to pass a new package of measures including increased spending for its stricken healthcare sector and moves to cover extraordinarylayoffs after deaths in the country from the coronavirus jumped by 368 Sunday
Deutsche Bank AG will operate in split teams globally from Monday as a way to curb the spread of the coronavirus
Asian equity markets weakened and US equity futures hit limit down to start the week as coronavirus fears and disruptions continued to spook investor sentiment, despite numerous policy measures to address the fallout from the outbreak including the Fed throwing the kitchen sink with a 100bps emergency cut and USD 700bln QE announcement.

European equities continue to erode in early trade [Euro Stoxx 50 -8.5%] despite pre-emptive monetary easing measures from global Central Banks including a 1ppt reduction by the Fed alongside a USD 700bln QE boost.

https://www.zerohedge.com/markets/quarantative-easing-fails-sp-brent-down-10-european-banks-all-time-low-monday-massacre

Basically what the Fed has done is create billions of dollars out of nothing on computers to buy debt. When you combine these debt purchases with the massive interest rate cut, the Fed has deployed some of the biggest tools in their arsenal to try and prop up the financial system.

Unfortunately for the Fed, this move has done nothing to reassure investors. Stock futures crashed and the only reason they didn’t go lower was because of a built-in mechanism designed to prevent the market from going down any further.

https://mobile.twitter.com/Tom_Winter/status/1239395200444874752?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1239395200444874752&ref_url=https%3A%2F%2Fdailystormer.su%2Ffederal-reserve-cuts-interest-rates-to-near-zero-but-stock-market-crashes-anyway%2F

There are a lot of vague ambiguous terms here but the point is that shit is hitting the fan. Let's see what happens next.
 
And don't forget that the market was weak before this. The FED intervened into the REPO market and began outright treasury purchases in September.

German manufacturing was in a recession Q4 of 2019. China and Japan also had a rough last two quarters of 2019.

We'll see where they are leading this.
 
:twisted: j
BlackJackal said:
Jack said:
stockmarketcrash.jpg

A massive interest rate cut and $700 billion worth of debt purchases by the Federal Reserve was not enough to stabilize the stock market.

K2mp4o3.gif
More news incoming of yet ANOTHER stimulus package and ofcourse tens of thousands have already been laid off.
 
Creating money from nothing is exactly what banks do when giving loans, pretending it's their money they're giving. Then they end up earning money that was originally thin air when the person who took the "loan" gives it back. This is one of the biggest lies surrounding the bank institutions.
 

Al Jilwah: Chapter IV

"It is my desire that all my followers unite in a bond of unity, lest those who are without prevail against them." - Satan

Back
Top