“dump the fed” Since the US Federal Reserve Bank has unlimited resources to meet capital requirements for transactions in “forward” markets and “margin calls” in futures markets, they will continue to have the ability to create profitable arbitrage opportunities for professional trading houses, in order to direct desired pricing outcomes…
Since the US Federal Reserve Bank has unlimited resources to meet capital requirements for transactions in “forward” markets and “margin calls” in futures markets, they will continue to have the ability to create profitable arbitrage opportunities for professional trading houses, in order to direct desired pricing outcomes for financial and commodity markets.
To rescue the collapsing market of the Monday October 19th, 1987 stock market crash, the New York Fed President , Mr. Gerald Corrigan on that dark Tuesday morning insructed his traders to “bid up” the deferred (less liquid) S&P futures contracts to create significant arbitrage opportunities for big US trading houses.
The trading houses immediately sold those inflated deferred contracts and simultneously went “long” (purchased) the stock market, locking in guaranteed profitable arbitrage returns . Their risk free stock purchases instantly reversed the market direction and ensured the robust rally that followed.
Today, the Fed directs similar strategies for any market they choose.
For example when the time is right they could simply create an arbitrage opportunity by selling down the deferred gold futures contracts -
traders again, will quickly step up and purchase the undervalued deferred months being offered by the Fed and simultaneously lock in their profits by shorting (selling) the spot prices - down goes gold,
Any wonder why Russia refused to sign on to “Bretton Woods Agreement” in 1944 ?
“dump the fed”
Since the US Federal Reserve Bank has unlimited resources to meet capital requirements for transactions in “forward” markets and “margin calls” in futures markets, they will continue to have the ability to create profitable arbitrage opportunities for professional trading houses, in order to direct desired pricing outcomes for financial and commodity markets.
To rescue the collapsing market of the Monday October 19th, 1987 stock market crash, the New York Fed President , Mr. Gerald Corrigan on that dark Tuesday morning insructed his traders to “bid up” the deferred (less liquid) S&P futures contracts to create significant arbitrage opportunities for big US trading houses.
The trading houses immediately sold those inflated deferred contracts and simultneously went “long” (purchased) the stock market, locking in guaranteed profitable arbitrage returns . Their risk free stock purchases instantly reversed the market direction and ensured the robust rally that followed.
Today, the Fed directs similar strategies for any market they choose.
For example when the time is right they could simply create an arbitrage opportunity by selling down the deferred gold futures contracts -
traders again, will quickly step up and purchase the undervalued deferred months being offered by the Fed and simultaneously lock in their profits by shorting (selling) the spot prices - down goes gold,
Any wonder why Russia refused to sign on to “Bretton Woods Agreement” in 1944 ?