The Fed Put $41 Billion into the Market -- Are We in a Crisis?

Includes: DIA, SPY
by: TraderMark

This is starting to really get worrisome.I have been saying a relentless stream of $15, $10, $20B a week has been flooding in our system, and thus propping up equities. But Thursday alone we had $41 Billion put into the market by the Fed. I thought everything was ok (sarcasm).

  • The U.S. Federal Reserve added a total of $41 billion in temporary reserves to the banking system on Thursday, the biggest single day of such injections since September 2001.
  • A Fed spokesman would not comment on the total size of the operations, but did say it was the largest single day of operations since a total of $50.35 billion was injected on Sept. 19, 2001, following the Sept. 11, 2001, attacks on the World Trade Center.
  • On Thursday, the central bank conducted $8 billion of 14-day repurchases, $21 billion of seven-day repurchases and $12 billion of overnight repurchase agreements.
  • The total on Thursday surpassed the $38 billion the Fed injected on Aug. 10, which was generally seen as the beginning of a global credit crisis. At the time, the Fed and the European Central Bank ramped up temporary liquidity operations with the intent of alleviating strains in short-term lending markets.
  • The Fed also injected a total of $38 billion on Sept. 27.
And keep in mind, they also have been taking assets off our financial institutions books. What used to be overnight (short term) repos are now turning into 30 day windows, which roll over month after month, as the financial institutions need it. Scary stuff. Everyone will be focused on the markets drop today, but this is the real news. Somehow all this money is not getting to the consumer. Banks appear to be hording or propping up balance sheets desperately.

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