I was asked (more like subtly accused) by a colleague if claiming on today’s show the notion of “I was talking about this way before…” wasn’t a bit on the “excessive boasting side,” insinuating that I myself was trying to front-run something that really no one else could have known prior.
The reasoning given was “I mean, really, who could have seen this coming months ago?” To which I forcefully answered: WTF are you trying to insinuate?
Let’s just say, at that moment, suddenly I then seemed to be the one “front-running” the questioning. But I digress.
Why? Simple – it ticked me off, and this person should know better. It irked me to the point I went back to see precisely when and if I did it pertaining to exactly this circumstance.
What’s the circumstance? Hint: The Fed’s now panic interjection and growth of the Repo markets, needing to not only raise the original amount from $75 Billion available overnight of just weeks ago and temporary. But then to over $100 Billion and “permanent,” to where last night when they raised the amount available again, this time to “at least” $120 Billion, it was oversubscribed needing $134 Billion to made available.
So, to answer the question: am I front-running this story? Here’s my response and I’ll let you decide, because in the end that’s all that truly matters. To wit:
From my article January 2, 2019 “Something to be aware of…” Yes – January.
Suddenly there seems to be some very unsettling actions taking place in what is known as the “General Collateral Repo Rate Market.” This market is one segment every business needs to both know and understand, whether you’re a solo-practitioner or, CEO of a global concern. The reasoning is this is where businesses of all types secure funding for their operational transactions.
This market is very liquid, or at least has been, when it comes to the transaction processes. However, in the final days of 2018 on Friday the market suddenly spiked in a one day record move, bringing the overnight rate to its highest since 2001.
However, this move was being explained away by many as a “one day, year end, balancing the book” type phenom. Then, it did it again as in – today.
That’s not something that is suppose to happen unless there’s something wrong. What that “wrong” may be is anyone’s guess. And guessing much of the “experts” are doing just that, for, again, this was only suppose to be a one-off-thing possible on the last day of the trading year.
From the same article, again, to wit:
The reason why I make this point is that there are some key identifiers that should not be taken lightly in the above and could hold (again, could) significant underlying clues, which are: These have been traded and accepted as – all worth the same in response to one from the other. i.e., all the “apples” in any given basket were assumed unbruised and insect free.
However, now with there being no longer any implied “Fed Put” or other central bank insurance and a “market” that has touched bear market status in mere weeks of all time highs, it may just be the so-called “banks” or “middle-men” no-longer trust what’s in these tranches without first knowing precisely what are in them, along with precisely what they may – or may no longer be worth at first blush.
Does it mean I’m right? I have no clue yet, in that light, I’ll only point to the last time I made such an observation was when I argued that when a company sends product across the oceans with the absence of a letter of credit, it wasn’t something to demonstrate how secure vendors feel in shipping their products and getting paid as so many argued, but rather, might be a sign of desperation.
Last time I warned on something like this, as I state in that article, the entire shipping container business sunk just months later. Today?
It appears to be the entirety of the Repo market. You know, the thing that keeps everything, and I do mean everything afloat.
The constant theme seems to always be curiously the same: no one ever seems to be able to see things like this coming ahead of time.
Seems I don’t have that problem, but then again…
What do I know.
© 2019 Mark St. Cyr