Hey everyone me kevin here: the federal reserve just doubled its capacity for accepting reverse repo operations from individual counterparties. In case you have no idea what the heck i just said in this last sentence. This video is for you, so i can explain to you why the dead cat bounce, we were expecting to be a reality on tuesday turned into a dead zombie that basically got up got on a rocket ship and the market just kept chugging along because apparently we Cannot dip the s p 500, more than three percent without people buying the crap out of it and buying the dip like crazy to the point where the market just does not want to fall. So let's explain this doubling of the acceptance of reverse repos at the federal reserve's overnight operations, and then maybe we can understand why the market refuses to dip or even crash all right.

Folks, we've seen this line before see the blue line. It goes up. It means banks and money, market funds and businesses have more cash than ever before. I'm giving you a big bottom line, i'm skipping the bs.

Okay, in fact, take a look at this see right here, march 31st kind of uh during the coveted recession here right march 31st of 2020 why'd. The line go up then well because businesses panicked, they cut spending, they drew credit lines, they laid people off and that way they had more cash to insulate themselves from the potential disaster that was to come, but thanks to trillions upon trillions of dollars of money, printing And stimulus which have now started to flow into the markets. We have this blue line going up over here, specifically after the slr uh, the supplemental statutory reserves - uh liquidity reserve requirements were changed on march 31st. Again the little specific details of this don't matter so much.

Basically, now, banks and money market funds have so much money, because businesses have so much money on deposit that we see this blue line go up. This blue line is, in effect banks taking treasury bonds in exchange for giving the federal reserve bank cash and the short-term effect of banks taking treasury to bond bonds is taking treasury bonds out of the potential for the fed to maybe sell these bonds, which increases the Price because there's less available supply of these bonds so increases the price of treasury bonds, which lowers rates so in other words, this is sort of a backdoor way for the federal reserve to keep rates low, which is interesting because the federal reserve is already buying up 80 billion dollars a month of treasury bonds, so in other words, the federal reserve is printing money like crazy, we're buying 80 billion dollars a month of treasury bonds, increasing the prices of bonds, but lowering the yields on bonds to support the economy. Lowering interest rates on things like credit cards and houses and so on and so forth, mortgages right car loans whatever. But on top of that, we're also working with giving banks the opportunity to capture some of these treasury bonds with their overnight deposits, taking them away from the market for a potential sale and now also supporting interest rates.

Staying lower interest rates. Staying lower is very accommodative, which props up this market with a lot of funny money. In other words, we got so much cash, we're now using that cash to make it easier to borrow more cash, but the problem is we're not really borrowing more cash. In fact, commercial lending is falling substantially.

Commercial lending and lending in general is falling so much that banks are basically begging people to borrow money. Look at joe biden announcing a couple weeks ago that the sba is willing to take on way more loans than ever before. If you're a small business, you want a really big eidl loan hit them up. They'll take care of you, because, essentially, what we're trying to do is make this fugazi economy a little bit stronger.

If we can encourage businesses to actually borrow money, spend the money, hiring people and building infrastructure or building new machinery or building out warehouses or factories or whatever and hiring people to do that, then maybe our employment rate, our unemployment rate, will finally go down more we'll Have better job reports we'll finally deal with this chip and supply crisis, we'll finally lower that inflationary impact, ironically by finally having more workers employed businesses need maybe potentially some more money to employ people. But businesses aren't taking the money, because businesses already have enough money, and so what's happening is businesses and corporations and people and individuals with high savings rates that we've seen recently have been buying every single dip. This is why, monday, when we thought that's, it buckle up. Everybody this is the perfect storm to buy the dip sign up for that stocks and psychology money course, because we got a lot of buy and sell alerts coming up buckle up.

We didn't really get an entertaining ride, still bought and sold stuff, but we didn't really get an entertaining ride because come tuesday everybody had started buying the dip within the last 30 minutes of monday, which led into a rally on tuesday and all of a sudden that Dead cat bounce just turned into a zombie riding a rocket ship to the moon, and here we go everything's taken off again, spacks are taking off high risk, plays, are taking off again crypto, slowly creeping back up. It's crazy we're just in this crazy world of all of this extra money and when you see the headlines that the federal reserve is doubling the uh amount of money. That they're, willing to accept from counterparties is just a sign that there is some fat cat bank that literally has so much money. They hit the 80 billion limit because the limit used to be 30 bill.

Now it's 80 bill. Now it's 160 billion, or it was 80 bill. Now it's 160 billion, there are 77 counterparties, or mostly banks participating in this we've got almost 1.3 trillion dollars going into this, which, if i have to divide the the amount that we have going into the reverse repos by 77 counterparties, uh oops uh, just disconnected my Screen there, but no problem: that's about 16.6 billion dollars per bank which the if the limit was 80 billion. Why is it a problem? What's the problem because there's some fat cat bank that literally has so much money that they needed a little bit of an extension in terms of how much money they can prop into the reverse repos and the fed's, like sure, we'll take some more stimulus.

In other words, we'll help we'll let you help us lower interest rates for the time being before we begin our taper and we'll just accommodate the market even more, because we do still want that unemployment rate to go down. Hopefully we don't create more inflation, but since we think inflation's going to be transitory, we're not so worried about it so may as well. Just keep accommodating this crazy market. Now, on one side, you've got a lot of people that are like this market's going to crash man like this there's no way this is sustainable, but on the other side, the catalyst for a crash aren't really here and even though people on the other side are Like yeah, there's probably going to be a crash one day, we don't actually think it's going to be soon because we're the catalysts we thought the best catalyst was potentially this week ever: grant crisis budget crisis debt ceiling, crisis, uh crisis with uh, with with um the Infrastructure negotiation, jerome powell, talking about a potential taper like we had the perfect pot of crap to make this market crash, and it just it just three percent on the s: p, 500 and these catalysts go away over the next three weeks.

So it's like we're going to be going into the end of the year with no negative catalyst, at least that i see at this point i mean maybe there'll, be some black swan to give us that correction we've all been looking for, but this could be a Full year here, without a five percent correction in the s p 500 - it's nuts, it's absolutely nuts uh! So if you're wondering what those headlines are about, the counterparty uh deposits for reverse repos being doubled, it's basically saying there's some fat cat bank. That has so much more cash and the fed's willing to let them help accommodate the market a little bit more by keeping rates low. That's, basically, all you need to know businesses corporations got too much money. People aren't borrowing enough money.

If you too, have too much money, well call lee use that coupon code linked down below on the programs for building your wealth, and let's make your money, make some money use that coupon code before friday, because all this inflation we've got the pricing is going to Be going up, but otherwise this whole repo thing. It's just a fat sign that we are so flush with funny money right now and there's no catalyst for crash. At least that i see at the moment again could be a black swan. But in the meantime you know people are going to be going by on the dip every single freaking day.

If you want to buy the dip with me, link down below see everyone thanks. So much for watching see you next time.