The Fed says it is going to start buying individual corporate bonds
1–10 of 15 posts
Re: The Fed says it is going to start buying individual corporate bonds
#2Definitely a good sign things are looking up guys!
Re: The Fed says it is going to start buying individual corporate bonds
#3Is there a point at which the SEC could/might consider the Fed’s activities as market manipulation, or is that outside the scope of the SEC mandate?
Re: The Fed says it is going to start buying individual corporate bonds
#4[deleted]
Re: The Fed says it is going to start buying individual corporate bonds
#5Absolutely unreal. Either things are worse than people are letting on, the Fed is simply refusing to let the market drop any further due to optics, or both.
I hope anybody who is bearish on stocks has closed out any short positions because at this point, I can't see how stocks will be allowed to go down.
Re: The Fed says it is going to start buying individual corporate bonds
#6Can anyone explain how this doesn’t lead to hyperinflation in the long run? The Fed is saying outright that they’ll continue to print more money whenever the stock market drops. At some stage that money will have to hit consumer prices, right?
Re: The Fed says it is going to start buying individual corporate bonds
#7Can anyone explain how this doesn’t lead to hyperinflation in the long run? The Fed is saying outright that they’ll continue to print more money whenever the stock market drops. At some stage that money will have to hit consumer prices, right?
This will lead to hyperinflation in assets and depreciation of the dollar. If we were any other country, we would have hyperinflation but we won't because the US dollar is the reserve currency. True hyperinflation will only happen if other countries refuse to accept US dollar or send all printed dollars back to Homeland.
Does that mean we have a free pass? No. This printing may cause
1. French revolution style riots (only 300 years ago)
2. Weimar republic style hyperinflation in assets (only 100 years ago)
3. Massive depreciation of US currency so now in the league of rich countries, US falls further behind
4. Other countries (China, EU, Russia) feel shafted and refuse to trade in depreciated dollars
Re: The Fed says it is going to start buying individual corporate bonds
#8Can anyone explain how this doesn’t lead to hyperinflation in the long run? The Fed is saying outright that they’ll continue to print more money whenever the stock market drops. At some stage that money will have to hit consumer prices, right?
The Fed announced these measures on March 23, and they are just now going to start buying these issues.
The Fed is trying to just "replace the wealth destruction that has happened". Keep in mind that even though the equity markets are back up close to pre covid levels, a lot of companies have had to take on Debt to weather the storm. This debt needs to be paid back with interest and in general can be a drag on company earnings.
The fed is also being somewhat judicious and buying shorter term securities (less than 5 years), so in essence they are only creating the money for the term of the bond they buy - they can choose to remove the money from the system when these bonds mature.
I also think that people are confusing the Fed trying to keep businesses solvent by providing short & medium term liquidity with them trying to raise equity prices.
Also the ECB & JCB have been doing this for the last several years with no inflation on the horizon there.
Re: The Fed says it is going to start buying individual corporate bonds
#9Can anyone explain how this doesn’t lead to hyperinflation in the long run? The Fed is saying outright that they’ll continue to print more money whenever the stock market drops. At some stage that money will have to hit consumer prices, right?
The Fed announced these measures on March 23, and they are just now going to start buying these issues. The Fed is trying to just "replace the wealth destruction that has happened". Keep in mind that even though the equity markets are back up close to pre covid levels, a lot of companies have had to take on Debt to weather the storm. This debt needs to be paid back with interest and in general can be a drag on compan…
> The fed is also being somewhat judicious and buying shorter term securities (less than 5 years), so in essence they are only creating the money for the term of the bond they buy - they can choose to remove the money from the system when these bonds mature.
I don’t think the Fed has any plans to shrink its balance sheet in the near future or probably ever. And what happens when these BBB- bonds turn out to be junk and the companies default?
Re: The Fed says it is going to start buying individual corporate bonds
#10Is there a point at which the SEC could/might consider the Fed’s activities as market manipulation, or is that outside the scope of the SEC mandate?
The financial markets have been propped up since 2008.
It started off as backstopping counter-party risk, and kept expanding.
The markets are nothing but manipulation at this point. There is no market that's independent of the Fed.
Our "leaders" should have fixed this in the decade after 2008, but now we've arrived at another crisis.