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SA Editor Colin Lokey

 
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  • Repoed, Part 2: A Deeper Look At Banks' Source Of Dry Powder [View article]
    I haven't dropped the claim that this has anything to do with QE? It has almost everything to do with QE.
    Jan 16 10:56 AM | 5 Likes Like |Link to Comment
  • No Hokum: No Stock Investments With Excess Reserves [View article]
    Additionally, you might try running your piece by former prop traders instead of lawyers. The lawyers aren't the ones doing the trading and as such they really wouldn't have any idea what actually goes on. I wouldn't, for instance, ask a derivatives trader what my chances of beating an insider trading charge were. Lawyers know what is supposed to be going on, but you might get a different answer from those who work in the trenches. But I wouldn't know anyone like that. wink wink
    Jan 15 10:48 PM | Likes Like |Link to Comment
  • No Hokum: No Stock Investments With Excess Reserves [View article]
    "I only said it could be done directly, without any flimflam."

    But why would you do it that way when you can send it through the repo market and come back with the same cash plus a balance sheet full of Treasuries. I think you are missing the main advantage of repo funding: you get to keep the Treasuries on the balance sheet plus you get to spend the money.
    Jan 15 10:38 PM | 1 Like Like |Link to Comment
  • No Hokum: No Stock Investments With Excess Reserves [View article]
    In regards to carrying it further: I am writing another piece as we speak.
    Jan 15 08:07 PM | Likes Like |Link to Comment
  • No Hokum: No Stock Investments With Excess Reserves [View article]
    Also, using the term "hokum" to describe my article reflects a lack of respect for the work of others and is generally unprofessional.
    Jan 15 05:36 PM | 1 Like Like |Link to Comment
  • No Hokum: No Stock Investments With Excess Reserves [View article]
    This article paints a very limited picture of what is going on and contradicts itself at nearly every turn. For instance:

    "One dollar of assets is like another dollar of assets. They are fungible."

    This being the case, it would be, in my opinion, rather strange to say that the $50+ billion in deposits Goldman Sachs has, aren't in any way related to the firm's "MSI" or, "Multi-Strategy Investments" unit which, to quote Bloomberg, "wagers about $1 billion of the New York-based firm’s own funds on the stocks and bonds of companies." I'm sorry, but if you know anything about prop trading and the Volker Rule, this article comes across as very, very naive.

    If there is anyone that works at a prop trading desk for a major bank reading this, I can assure you they are shaking their head right now.

    I sincerely mean no offense by this comment at all, I'm just telling it like it is.
    Jan 15 04:31 PM | Likes Like |Link to Comment
  • Repoed! How The Fed And Depositors Fund Banks' Big Bets [View article]
    The same figure is in L2.13 under "U.S.-Chartered Depository Institutions."
    Jan 15 11:39 AM | 1 Like Like |Link to Comment
  • Repoed! How The Fed And Depositors Fund Banks' Big Bets [View article]
    You need to look at L.110 "U.S.-Chartered Depository Institutions, Excluding Credit Unions." Banks' holdings of corporate equities are at their highest level since 2007 and their holdings of Treasuries and agencies... well... I guess you know what that looks like.
    Jan 15 11:37 AM | 1 Like Like |Link to Comment
  • Repoed! How The Fed And Depositors Fund Banks' Big Bets [View article]
    "The excess cash comes from the difference between loans and deposits that you highlight at the beginning."

    Excess reserves also come from the Fed's deposits of dollars on the books of primary dealers in exchange for Treasuries.

    " But QE reduces the number of Treasuries owned by banks (and increases excess reserves). So, if anything, QE would have the effect of reducing this repo channel."

    As I said before, take a look at the amount of government securities on say, Morgan Stanley's books now as opposed to in say, 2005. Banks own more Treasuries than ever. When the Fed buys Treasuries, banks turn around and buy more Treasuries. If you want proof of this, take a look at the NY Fed's website sometime and compare the timing on Fed purchases of Trreasury bonds from dealers and the Treasury's auction of comparable notes. There are many occasions when these ops are just hours apart.
    Jan 14 02:52 PM | 2 Likes Like |Link to Comment
  • The Great Recession Is Over: Time To Back Up The Truck [View article]
    Also, my company, Classmate, is an early stage Ed tech startup in the vein of Khan Academy. The problem, which I have spent the past year researching, is that employers still want to know where your degree is from. Certificates from online education sites don't carry much weight with employers. At Classmate we have discussed this and decided it is better to offer a free service for educators and learners to use for their existing courses (like Schoology or Edmodo) while mixing in the ability for educators to create public content (like that created on Udemy or Khan Academy). I fear the dream of a free world class education will be hampered for the foreseeable future by the demand by employers of an actual degree. Coursera (which is a lot like Khan academy) is figuring this out and will start offering for-credit courses for a fee in January. Anyway, this was a tangent, but it's what my company does so I thought I would mention it. Www.classmatelive.com
    Jan 2 11:38 AM | 1 Like Like |Link to Comment
  • The Great Recession Is Over: Time To Back Up The Truck [View article]
    There seems to be a generalized denial of the fact that the U.S. economy has experienced its lowest growth rates in 50 years in the two decades from 2000-2009 and from 2010-present. Optimistic predictions about the future are fine--intelligent debates about the future course of the economy are what I do everyday both in school and at home. If there were no optimistis for me to debate, life would be very boring. However, the idea things are going well right now is patently false, it isn't debatable. The stock market has done well. The economy has not (at least not by historical standards).
    Jan 2 11:33 AM | 6 Likes Like |Link to Comment
  • False Hope: Low Rates, Write-Offs Make Americans Richer By Default [View article]
    Actually, the growth rate for labor productivity in the U.S. from 2004-2012 has been quite low by historical standards. Depressed capex will naturally lead to decreased productivity and depressed capex has been a defining feature of this recession. See the following article on productivity and capex: http://seekingalpha.co...
    Thanks for reading.
    Jan 1 11:19 PM | 1 Like Like |Link to Comment
  • False Hope: Low Rates, Write-Offs Make Americans Richer By Default [View article]
    Describing my use of GDP growth and GDP per capita as "scouring the world for little details" seems a bit of a stretch considering those two measures are probably two of the most cited data points in the world in terms of assessing economic performance and financial well being. As for benefiting from the run-up during the past three+ years, I would imagine that for the vast majority of folks, that period served only to help them recover what was wiped out in the fall of 2008. Recouping one's retirement by staying invested during uncertain times is admirable and shows fortitude. Dollar-cost averaging into the market during those dark days in the early months of 2009 was a fantastic idea and surely helped those with a strong stomach enhance their returns over the next three years. The fact however, remains, that the S&P 500 is still below its pre-crisis levels, so the idea that all of these folks who stayed invested after losing 40-50% during the crisis have since made a fortune is a gross mischaracterization of what has taken place. In reality, equity mutual funds have seen outflows of nearly a half trillion since 2008 (http://bit.ly/VYGKNG) as investors, still reeling, have switched to bond funds while the run-up in stock prices has been largely fueled by the Fed's printing press. Along the way, retail investors have soured on the market and on Wall Street in general which they seem to view as somewhat of a casino since 2008. Meanwhile, GDP growth creeps along at around 2% and unemployment inches lower while the Fed supports the whole house of cards with $85 billion in flow. This whole thing is broken.
    Jan 1 05:52 PM | 3 Likes Like |Link to Comment
  • False Hope: Low Rates, Write-Offs Make Americans Richer By Default [View article]
    Tack: sound analysis and good comment. Thanks.
    Jan 1 05:31 PM | Likes Like |Link to Comment
  • False Hope: Low Rates, Write-Offs Make Americans Richer By Default [View article]
    Now if only this article were about global investing and not specifically about the U.S., the above would actually be a very insightful comment.
    Jan 1 04:13 PM | 2 Likes Like |Link to Comment
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459 Comments
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