(03-31-2020, 09:23 AM)vbin Wrote:(03-30-2020, 05:44 PM)fenders53 Wrote:Did you mean fed will be buying? Fed will need congress's approval to directly buy stocks ETFs or stocks.(03-30-2020, 02:01 PM)vbin Wrote: I sold a few vixy September puts of $12, I think volatility will go down in coming months.I think they will be buying SPY by the time earnings start coming. If oil stocks bounce soon I will short them. The leap calls should work out though. Oil won't stay down forever.
Also booked USO leap calls. @Otter totally agree with you there. I also have leap calls on BKR, XOM, OXY.
I want to sell more SPY but fed printing too much money is scaring me. Basically fed is ready to so anything to save the market.
Fed has expanded its balance sheet by 25% of GDP in a week, across treasuries, MBSs, munis, and commercial paper. It is also accepting equities as collateral on short term loans to its primary dealers, but is not buying equities directly as it does not have authority to do so.
Fed's stabilization of the credit markets, and acceptance of equities as collateral as part of that process has created some degree of backstop in the equity markets, and the inflationary pressure of 5 trillion+ in additional overall liquidity in the economy is no doubt also a factor driving the recent run in equity prices.
Still think this bear market rally with have another down leg, human nature being what it is.
Long-term, I think what the Fed is doing will have similar results to what they did during and after 2008/2009 until the economy got its footing back. After an initial flight to safety that temporarily increased the value of the dollar relative to other currencies, the dollar dropped in value for several years afterwards, and commodities'/precious metals' dollar-denominated values rose to match as the recovery got underway after the March '09 lows.