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FED Does $200 Billion REPO

The Fed did giant repo’s today as banks are no doubt struggling for liquidity.

They did $103 billion in 1 day, $45 billion in 14 days and $50 billion in 25 days.

Unfortunately in this situation they should NOT have turned down $74 billion in repo requests–we are on the verge of a liquidity collapse in the bond market–you can see it in the rates–they have been stable or slightly higher–there are liquidity strapped sellers in all of the bond markets.

The FED screwed up when stocks were moving higher for years by not raising interest rates–and now they are screwing up when stocks are moving lower. If they let us fall into a liquidity crisis we are going to see stock prices plunge like we only saw in 1987.

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