20190927-Still more on repo market

What does it mean (American Bank Nearing Collapse?)

-A truly heart-pounding new Ministry of Finance (MoF) report circulating in the Kremlin today confirming global banking giant Goldman Sachs warning that world stock markets “are about to get wild in October”, states the more accurate word they should have used to describe what is coming would be catastrophic.

—It is due to one of America’s largest banks so near to collapsing, the Federal Reserve is rushing to keep it afloat with a staggering $1.5 trillion emergency bailout—an emergency bailout, however, the Federal Reserve is spreading out with $75 billion daily payments until 10 October so as not to alarm and place into panic their nation’s citizens.

- Because as the FT reported on Friday as part of its interview with the NY Fed's new, hapless and confused career-economist president, John Williams (who back in May inexplicably fired the man most intimately familiar with the plumbing of the US financial system, the NY Fed's market desk head Simon Potter), the NY Fed president said that it was "looking at why cash failed to move from banks’ accounts at the Fed into the repo market, where banks and investors borrow money in exchange for Treasuries to cover short-term funding needs."

-The NY Fed is is trying to figure out why fellow banks did not hand out their cash to other banks that were in desperate need for liquidity, and why most banks’ reserves were so "concentrated", i.e., sticky, so as to precipitate a funding crisis which was only halted when the Fed stepped in.

-Wendy:  the NY Fed is trying to figure out why the fellow banks wouldn’t lend money to the bank(s) that is desperately short of cash.

-In any event, if Williams really wants to find out why banks failed to step in and prevent last week's repocalypse, he should start with the banks that are laid out in the chart above- and maybe he should focus first and foremost on the foreign banks that currently have $521 billion in cash parked at the Fed, on which they - the foreign banks - are collecting 1.80% in annual interest.

Leak Project (Feds Dump $278 billion into Markets):

-His guest Bob Kudla thinks the repo market event was caused by some big bank that desperately needs cash.   A wrong bet was not extended.    He thinks either a bank in Asia or Europe is in trouble.   His guess is Deutsche Bank or HSBC not in US, because US has a different set of collateral rules.   That’s probably why our banks didn’t lend to these banks.  Besides they probably knew who the trouble bank is.

-Who knows it might be the Chinese who are short of USD.   They are coming back to the negotiation table on 10/10, 10/11.   That coincided with the expiration of Fed’s funding for the repo market.