Jesse's Café Américain Fri 2010-01-29 16:15 EST

Why Are 86% of the NY Fed's MBS Purchases Occurring During Option Expiration Weeks?

Jesse

My friends at ContraryInvestor have published some remarkable data...This data suggests that the Fed's purchases of Market Backed Securities serves not only to artificially depress mortgage rates and the longer end of the yield curves. The purchases occur, with a remarkably high correlation of 86%, during monthly stock market options expiration weeks in the US...Talk about timing of liquidity injections to get maximum effect in the equities market...option expiration in the US stock indices occurs on the third Friday of every month. We have pointed out in the past that this monthly event is often the occasion of some not so subtle racketeering by the funds and prop trading desks.

86; Jesse's Café Américain; NY Fed's MBS Purchases Occurring; options expirations week.

The Money Game Mon 2009-12-28 16:44 EST

Here's The Secret Reason We Eliminated The Bailout Caps On Fannie And Freddie (FNM, FRE)

On Christmas Eve, when the news was assured of getting no coverage whatsoever, The White House announced that it had eliminated the maximum bailout cap for Fannie Mae (FNM) and Freddie (FRE). As some observers have pointed out, all the move really did was formalize what everyone has figured for decades, that the two zombie GSEs were truly organs of the federal government, and that their debts would be backed up ad infinitum. So, why the move, and why then? Credit analyst Edwart Pinto shares his theories.

Bailout Caps; eliminate; Fannie; FNM; FRE; Freddie; Money game; s; secret reasons.