Pomo Schedule

Pomo Schedule

Bernanke_pours

Everyone at Trading Advantage hopes you had a great holiday, with plenty of relaxation and good times with the family.  It was with family over this extended weekend that generated this post.  When discussing the markets (which I can never avoid) the Fed came up, but specifically how the Fed is “supporting” the markets via POMO.

POMO is the Fed’s acronym for Permanent Open Market Operations.  From the FRBNYs website we read its definition “The purchase or sale of Treasury securities on an outright basis adds or drains reserves available in the banking system. Such transactions are arranged on a routine basis to offset other changes in the Federal Reserve’s balance sheet in conjunction with efforts to maintain conditions in the market for reserves consistent with the federal funds target rate set by the Federal Open Market Committee (FOMC).”  To be blunt, this is how the Fed rigs interest rates and all other markets by extension (and by design).

Unfortunately, my relative desperately clings to fantasy and refuses to believe that the Fed is rigging the markets.  When given a choice between the red and blue pills, he always chooses the blue pill so that he can remain in the fabricated reality of the Financial Matrix.  Besides, other beliefs like the Easter Bunny must still be fun too.

When I told him that the Fed is buying $85 billion per month of US Treasuries, he thought I was making up huge numbers to simply make an anti-Fed point.  He wanted more details.  Of course, I wasn’t making anything up so I plucked my trusty smartphone from my pocket and showed him the chart.

Remember, as I told him, these are “open market operations.” The Fed is hiding nothing.  There is a schedule to rig the markets.

This is a light month because the FRBNY trading desk only plans to buy $45 billion in April.  If the market drops, will the Fed buy $125 billion ($85b + $40b)?

Trade well and follow the trend, not the perma-bull OR perma-bear "experts."

Best Trades to you,

Larry Levin

Founder & President- Trading Advantage

TradingAdvantage.com