WORTHY WEEKEND READING:
If you’ve been following the cat fight between Zerohedge and Minneapolis Fed President Neel Kashkari, you will recall that Kashkari asked "someone" to explain to him "how swapping one short term risk free instrument (reserves) for another short term risk free instrument (T-bills) leads to equity repricing."
Zerohedge responded, explaining in great detail how the Repo market works and how QE4 works, concluding with (paraphrased from memory): Here’s the bottom line Neel: just have the FED PUBLICLY ANNOUNCE that they are ceasing all Repo support, and see what that does to equities within minutes of the announcement.
A few days later former Fed dude Bill Dudley wrote that the Fed's balance sheet expansion [QE4] has no effect on the stock market.
Finally, Wednesday, SMBC Nikko's Masao Muraki, formerly one of Deutsche Bank's most respected strategists, wrote the definitive report basically reinforcing everything Zerohedge has been saying.
The main highlights from Muraki's report are here: [Pasta likes Figure 8]
https://www.zerohedge.com/markets/here- ... to+zero%29