Thursday 12 March 2020

They know nothing

US equity indexes closed severely lower, sp -260pts (9.5%) at 2480. Nasdaq comp' -9.4%. Dow -10.0%. The Transports settled -10.7%. Near term outlook offers secondary target/support of the Dec'2018 low of 2346.




US equities opened severely lower, with the 7% circuit breakers kicking in for the second time this week, within the opening minutes.

Yours truly will be the first to slate the mainstream cheerleaders, but I'll also highlight them when they are correct. The following (pre-market) chatter, is must see viewing...

"They know nothing, they know nothing,... (Faber - 'right'), we know more than they do and that's not acceptable either. I want the federal government to know more than me, all right, (Faber - 'I hear you'), I knew more than they did in 2007, and I know more than they do now and it is disappointing, perhaps they should talk to more leaders, and leaders can be more candid".

The Cramer continued...


Just after the SPX printed 2500, the Fed announced...

As a part of its $60 billion reserve management purchases for the monthly period beginning March 13, 2020 and continuing through April 13, 2020, the Desk will conduct purchases across a range of maturities to roughly match the maturity composition of Treasury securities outstanding. Specifically, the Desk plans to distribute reserve management purchases across eleven sectors, including nominal coupons, bills, Treasury Inflation-Protected Securities, and Floating Rate Notes. The distribution of purchases across sectors will be the same distribution as the Desk uses to reinvest principal payments from the Federal Reserve’s holdings of agency debt and agency MBS in Treasury securities. The first such purchases will begin tomorrow, March 13, 2020.

Today, March 12, 2020, the Desk will offer $500 billion in a three-month repo operation at 1:30 pm ET that will settle on March 13, 2020. Tomorrow, the Desk will further offer $500 billion in a three-month repo operation and $500 billion in a one-month repo operation for same day settlement. Three-month and one-month repo operations for $500 billion will be offered on a weekly basis for the remainder of the monthly schedule. The Desk will continue to offer at least $175 billion in daily overnight repo operations and at least $45 billion in two-week term repo operations twice per week over this period.

$500bn 3mth today. 
$500bn 3mth.... Friday 
$500bn 1mth.... Friday
+$175bn overnight REPOs 
+$45bn 2wk REPOs... twice a week

On any basis.... its unbelievable.

The afternoon saw equities swing from a fed bounce high of 2660 to end the day badly - arguably on margin calls, to 2478, and settling at 2480.

Volatility broke a new cycle high, the VIX settling +40.0% to 75.47. Secondary target of the Dec'2018 high of sp'2346 is a valid target within the immediate term. A subsequent bounce could be expected to challenge 3K.  

Extra charts in AH (usually around 5pm EST) @

Goodnight from London
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