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Buzz and Banter


The Federal Reserve injected a rather large $17 billion into the system this morning through the repo market.

It is not month end and there is no government bond auction. We don't know if there is a good reason why the Fed would inject so much liquidity (they don't tell us mere mortals), but it is rather coincidental that it comes the day after a larger than normal (at least recently) down move in the market.

I have stated before that lower volatility encourages investors to buy stocks and I stated yesterday that liquidity (at least in the short run) mitigates volatility. So without another good explanation I must conclude that the Fed is targeting lower volatility and a higher stock market.
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