preempalver
Joined 13 years ago
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12
Member since
Sep 16
www.thesharmas.org
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Comment · 13 years ago
Comment · 13 years ago
Anybody who thinks that IPO pricing is done by DCF.....
Comment · 13 years ago
Comment · 13 years ago
Ok lets agree to disagree :). Just FYI, 10 Yr Aug UST low yield (best price for bank to buy) was 258bps. Highest rate for Aug was 278bps (highest point at which the fed could have bought). By doing the flip the bank could make a yield of 20bps. It has to front cash for capturing this yield. If it just kept the cash at the fed it would earn a risk-less 25 bps (IOER). The fed is sterilizing the purchase by IOER so it isn't monetizing the debt! This is the fundamental misunderstanding with QE, its just a tool to target the rate. If we were truly monetizing the debt, inflation would be soaring through the roof! I would strongly recommend reading this -> http://pragcap.com/understanding-quantitative-easing
Comment · 13 years ago
Agree, selling will be problematic. The fed's probably going to use reverse-repo to exit. See http://www.voxeu.org/article/exit-path-implications-collater... and http://ftalphaville.ft.com/2013/08/27/1612763/will-this-be-t...
Comment · 13 years ago
The original comment was to reflect that the Fed is not monetizing the government, which is different than influencing the treasury market. The fed is influencing the market by effecting the "rate" not the "size". Just by influencing the treasury market you cannot make the logic leap that they are creating $ for the government to spend (recklessly?), or forcing the government to create more UST in order to pay back older maturing UST.
Comment · 13 years ago
Where is the hyperinflation? Data please
Comment · 13 years ago
Reducing the supply of UST !=Increasing the money supply. All QE is doing is increasing bank reserves. Unless bank lend the reserves out money supply is not affected. With IOERR and general aggregate demand being jacked, banks are not really lending money out to actually increase the money supply. If just taking UST's out would have increased money supply we would have seen a lot more inflation!
*edit: IOER = Interest on excess reserves. See http://synthenomics.blogspot.com/2012/08/interest-on-excess-... for a good explanation
Comment · 13 years ago
The fed is buying bonds on the secondary market i.e not directly bidding and taking down auctions at treasury. This may sound minute but is a huge point. See http://pragcap.com/understanding-quantitative-easing
Comment · 13 years ago
So 80Bil on 1 Trillion, ie 8% yearly return. Thats a shitty hedge fund
Comment · 13 years ago
Apple also has $15B of MBS (mortgage backed securities) on its books. Near cash it is not. GAAP is correct.
Comment · 13 years ago