Oh. My. God. This is so awesome.
I have spent the weekend beating myself up for not being totally short. I watched with chagrin as the weekend indications showed the Dow dropping 1100 points at the opening bell on Monday. And yet, God bless ’em, the Federal Reserve and its timorous chairman, Jerome Powell, have absolutely panicked. As described over on ZeroHedge, the measures they took include:
- Welcome back ZIRP: Fed cuts rates by 100bps to 0-25bps from 1.00 -1.25bps.
- Fed officially launches QE5 (no more “Non-QE” bullshit), consisting of “at least” $500BN in Treasury purchases and $200 billion in MBS.
- Boosting intraday liquidity: The Fed announces Measures related to the discount window, intraday credit, bank capital and liquidity buffers, reserve requirements, and—in coordination with other central banks—the U.S. dollar liquidity swap line arrangements
- Reserve requirements cut to zero: The Fed cuts reserve requirement ratios to zero percent effective on March 26.
- Coordinated swap lines: The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank announced a coordinated action to enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements. The pricing on the dollar liquidity swap arrangements is cut by 25 basis points, so the new rate will be the US dollar overnight index swap (OIS) rate plus 25 basis points.
The immediate reaction has been pretty crazy. We went from -1100 on the Dow to +260. As I’m typing this, it’s down about 250 again.
I can only hope that we rally tomorrow, but if we don’t, forget it, it’s the end of the world. I’ll say it again.
Because, for the love of my personal savior Jesus H. Christ, a reserve requirement of ZERO? Oh my GOD! Sweet baby Jesus!
The GLOBEX hasn’t opened yet, but I’m looking at FOREX now, and the US dollar has already taken a hit. I suspect those who gobbled up GDX calls during Friday’s puke might have a very happy Monday.
Anyway, my point is this: instead of waiting with terror for Wednesday’s announcement, we’ve already GOT the news. We have all the information we need. What are they doing to do Wednesday? Announce NEGATIVE rates? I don’t think so. The cat’s out of the bag.
Come on, America. Stocks on “on sale”. Bid these suckers up. I’ve thirsty for Powell blood.