Mrcauser’s Weblog

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My prescription….

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Take the stimulus money divided by every person on the IRS taxpayer roll and cut them a check. Kind of like reviving a heart attack victim.

Worked for me!

The Fed’s Got POMO Fever! – Phil’s Favorites

That’s right kids. Pretty much EVERY SINGLE DAY the market is open and twice on the 29th, the Fed will hand out Billions to “fix” the economy. Keep in mind they have no intention of stopping on the 9th, that’s just the end of month one! I know that we have all gotten comfortably numb with regards to large numbers but let’s consider for a moment how much money EACH $8Bn is as this is OUR money the Fed is spending:

* It’s enough to pay 5.33M $1,500 Mortgage Payments – enough to pay off every home in America each month!
* It’s enough to buy out 40,000 $200,000 Mortgages EACH DAY.
* It’s enough to pay a full year’s $50,000 Salary for 160,000 workers – EACH DAY. In a single month, the Fed could put 4.8M people back to work rather than flushing it back through the banks and Treasury in the hopes that a few jobs will trickle down to the people.
* It’s more than the ENTIRE Federal Education Budget for 2010 EACH MONTH!
* It’s the ENTIRE EPA budget for the year EACH WEEK. Also EACH WEEK, it’s the ENTIRE budged for the Department of Labor or the Department of Commerce for the year. If you want to create jobs – perhaps we could send a few dollar their way instead?
* Every 2 Weeks it’s the ENTIRE budget of the DOE, HUD or Homeland Security.
* EVERY WEEK it’s also the ENTIRE budget of the Department of the Interior, NASA, the NSA or the SBA (oh yes, we really care about small business, don’t we?).

Does that seem just a little bit insane to you? Hopefully, I have gotten the point across that $8,000,000,000 per day is A LOT OF MONEY. Our friends at Goldman Sachs, who belly up to the POMO window on a daily basis, sent a note out to clients in late October saying (Zero Hedge):

On the interplay between the FED and STOCKS: Since Sept 1 – when QE was becoming a mainstream focus – if you only owned S&P on days when the Fed conducted Open Market Operations (in US Treasuries), your cumulative return is over 11%. in addition, 6 of the 7 times when S&P rallied 1% or more, OMO was conducted that day. this compares to a YTD return of 5.8%. the point: you would have outperformed the market 2x by being long on just the 16 days when – this is the important part – you knew in advance that OMO was to be conducted. The market’s performance on the 19 non-OMO days: +70bps.

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Written by mrcauser

November 13, 2010 at 6:54 pm

Posted in Uncategorized

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