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Buzz and Banter



Kevin suggests that the bulls will not give up without a fight, and to provide a little fuel for the bulls, the fed has graciously added $5.25 billion to the system in liquidity through a one day repo agreement this morning.

Essentially, the Fed buys a combination of treasury bills and agencies from dealers with the agreement to buy them back tomorrow. This gives a significant chunk of money to the dealers to lend or pretty much do whatever they want with for a day.

Regardless of what you think the Fed's motives or objectives are, their actions illustrate a specific desire to reduce volatility by cushioning any move to the downside on a heavy day. This process of reducing volatility is essential to encourage investors to stay in the markets.

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