Faber News Flow

It was supposed to usher in a market crisis that would prompt the Fed to launch QE4 according to   repo guru Zoltan Pozsar . In the end, the preemptive   liquidity tsunami  unleashed by the Fed in mid-December which backstopped just shy of $500 billion in liquidity, proved enough to keep any latent repo market crisis at bay. The year's final overnight repo operation, which the Fed expanded to as much as $150 billion ended up being just 17% subscribed, as Dealers submitted only $25.6 billion in securities ($15.2BN in TSYs, $2BN in Agencies, $8.35BN in MBS) in the year, and decade's, final overnight repo meant to bridge the financial system's short-term funding needs into 2020. As a result of the Fed's massive, preemptive liquidity backstop, the overnight G/C term repo rate quickly dropped back to a subdued, and quite normal, 1.55% after starting the day north of 1.80%. One thing is certain: last New Year's firework, which saw the overnight G/C repo rate s

This little monster that feeds beneath the surface of global banking at its core briefly raised one ugly eye out of the water as 2018 turned into 2019. I wrote back then that the interest spike we saw in the kind of overnight interbank lending known as repurchase agreements (repos) was just the foreshock of a financial crisis being created by the Fed's monetary tightening. I said the Fed's continued tightening would eventually result in a full-blown recession that would emerge, likely out of the repo market, sometime in the summer. In the very last week of summer, the Repo Crisis raised its head fully out of the water and roared. When I first wrote of these things at the start of 2019, the Fed had only been up to full-speed tightening for three months, and already it was blowing out the financial system at its core. The stock market had just crashed with the onset of full-speed tightening just as I had said it would. It fell hard enough to where the only index holding j

"But everyone else was long too, right?" Stock and bond prices were both down today - adding up to the worst combined day since 12/2 Source: Bloomberg US Major equity indices were all lower on the day, despite a valiant attempt at a bounce... Source: Bloomberg Chinese markets were higher overnight... Source: Bloomberg European stocks were lower today... Source: Bloomberg US markets perfectly reflected AAPL today as the buyback machine lifted the market then stalled... US Majors also broke the December uptrend line today... And Nasdaq fell (for the 2nd day) back below the key 9,000 level... FANG stocks have erased last week's gains (biggest daily drop in six weeks)... Shorts were squeezed as Europe closed, and managed to lift Small Caps to green, but could not hold it... Source: Bloomberg A 'mini' rotation today from TSLA into NIO? VIX and stocks continued to decouple... Source: Bloomberg Cre

It appears the US cash market open is a 'bearish' event now. After ramping gently overnight, US equity markets are dumping as markets open, erasing all gains from the Boxing Day spike... So much for the Santa Claus Rally... Treasuries are bid after their yield spike... And gold is rallying...

After 11 years of "the Fed is the market" expansion, the Fed has now reduced its bloated balance sheet by 6.7%. This is normal, right? So here we are in Year 11 of the longest economic expansion/ stock market bubble in recent history, and by any measure,  the hour is getting late , to quote Mr. Dylan: So let us not talk falsely now the hour is getting late Bob Dylan, "All Along the Watchtower" Sony Says Image Sensor Demand Outstripping Supply The question is: what would happen if we  stop talking falsely ?  What would happen if we started talking about end-of-cycle rumblings, extreme disconnects between stocks and the real economy, the fact that "the Fed is the market" for 11 years running, that  diminishing returns  are setting in, as the Fed had to panic-print $400 billion in a few weeks to keep this sucker from going down, and that trees don't grow to the troposphere, no matter how much the Fed fertilizes them? When do we  stop talking falsely  abou