QResear.ch

#18730129 at 2023-04-21 17:06:26 (UTC+1)
Q Research General #22981: Blue Check Blues Edition

>>18729529 lb Day Traders Lose $358,000 Per Day Gambling on Zero-Day Options (0DTE)

The VIX Is Dead, Long Live The 0DTE VIX

Trading in zero-day-to-expiry contracts continues to dominate the options market, leaving the VIX unreflective of underlying market risks. Since the VIX is calculated using derivatives that expire 23 to 27 days into the future, the thinking is that it has been struggling to capture this near-term sentiment, which largely emerged last year when the introduction of new expiration days fomented the boom.

Put simply: In the age of 0DTE, Wall Street may need a new fear gauge. Enter the one-day VIX. "This makes sense because so much of the volume has moved to shorter tenors," said Amy Wu Silverman, head of derivatives strategy at RBC Capital Markets. "I've been joking that the VIX is going through a mid-life crisis, being replaced by someone younger (shorter dates)."

Next week, the CBOE will launch a One-Day VIX that will give market watchers a much fuller picture of risks in the equity market. For those who don't want to wait that long, here's a back-of-the-envelope calculation of just how much more risk traders see in the market than captured by the conventional method. We'll have to make some simplifications, and this isn't a means of front-running the CBOE 1-Day Volatility Index. We're only using ATM options, so this doesn't include any information on skew, but it shows the overall picture: ~0DTE vol has been structurally rising versus the VIX. Following only the VIX in recent months would be like watching a duck serenely swimming on a pond, unaware of the "zero-day" legs frantically swimming under the water.

A glance at MOSO (Most Active Options Page on Bloomberg) shows that very often the top-traded option contracts expire that day. There is ongoing debate in markets whether these duck legs are inherently destabilizing. No margin needs to be posted for zero-day options, so it is easy to increase leverage.

Overnight risk has probably increased as 0DTEs are being used to hedge.

Also, risk-taking will likely rise to maintain profitability as more people start executing similar 0DTE strategies. So while 0DTE trading may not be an immediate market risk, there are enough concerns to make it essential to add the one-day VIX to your screens next week.
https://www.zerohedge.com/markets/vix-dead-long-live-0dte-vix

The FRB used to smash the VIX every time it got too high-yes they have a trading desk in several of it's branches even though they seldom talk about it-cap#3 is a screen shot from the NYFRB one quite a while ago so tech has certainly increased since that was taken


from July 2012 cap#4 is the 'result' of that switch of head of markets group
The Federal Reserve and the VIX Index
NY Fed names Potter as head of markets group

The Federal Reserve Bank of New York named Simon Potter, an internal director of economic research, as the new head of its division that conducts monetary policy in the marketplace for the U.S. central bank. Potter, 51, starts as head of the New York Fed's markets group on June 30, replacing Brian Sack, 41, whose resignation was announced in April. The markets group deals directly with Wall Street and foreign central banks, carrying out Fed actions in the open market. Potter will oversee the extension of so-called Operation Twist, unveiled on Wednesday, in which the Fed sells short-term bonds and replaces them with longer-term ones in an effort to lower borrowing costs. Potter, who is now the co-head of research and statistics at the New York Fed, will also manage the Fed's System Open Market Account (SOMA).
https://www.reuters.com/article/usa-fed-markets/update-3-ny-fed-names-Potter-as-head-of-markets-group-idINL1E8HLGU020120621

#18367436 at 2023-02-18 01:33:55 (UTC+1)
Q Research General #22515: Our Game Edition

From Feb 15th-and some background and translation for non-financial oriented anons below

JPMorgan's Kolanovic Warns of 'Volmageddon 2.0' Risk in Options: potential Flash Crash due to over-sized zero days to expiry option over-use translation included

The explosive rise of short-dated options is creating event risk on the scale of the stock market's early-2018 volatility implosion, according to JPMorgan Chase & Co.'s Marko Kolanovic. That episode, known as Volmageddon, sparked market chaos exactly five years ago (what could be potentially coming/brewing with this here will make that look like a bounce house party) and forced the shuttering of one major volatility-focused exchanged-traded product (this is the VIX and the Federal Reserve watches/manages this quite a bit-it is know as muh 'Fear Index' so they try to control it as much as they possibly can- when it got out of hand in 2012 the FRBNY brought in a "specialist" to manage the spiking VIX and the result can be seen in Cap#3-story linked below). The latest proliferation of options with zero days to expiry has similar potential to create market turmoil, the top-ranked strategist says. By his team's estimate, daily notional volumes in such short-term options - known as 0DTE (Zero days to expiry)''' in industry parlance -is around $1 trillion."While history doesn't repeat, it often rhymes," Kolanovic wrote in a note to clients. The selling of these "daily and weekly options is having a similar impact on markets." The February 2018 "Volmageddon" episode is one of the more famous instances of dynamics in derivatives markets bleeding into their underlying assets, in this case stocks. The main culprits were exchange-traded funds designed to pay investors the inverse of equity volatility. When turbulence in stocks ramped up in the early part of that month, it triggered a snowballing effect that eventually sent many such strategies hurtling toward worthlessness, contributing to a 10% plunge in the S&P 500 over two weeks.

Now, Kolanovic is issuing what's likely the loudest alarm on 0DTE options whose explosion since mid-2022 has been often blamed for amplifying moves in underlying assets. Their impact was on display Tuesday, when S&P 500 futures swung wildly following an inflation report, making any attempt to figure out the market's collective thinking on the economy an especially futile exercise-(and if you thought Tuedays action was completely ridiculous…it certainly was because of these 0DCE expiration's when the CPI #s came out it was a rollercoaster…wait…you ain't seen nuffin yet-that is IF they allow a consequence because that is the key to any market moves…allowing consequences of this type of behavior-the big bois never have them) In the eyes of Kolanovic, the risk involves options dealers, who take the other side of trades and must buy and sell stocks to keep a market-neutral stance. Since 0DTE options rarely get in the money, their market impact is now mostly felt through volatility suppression and an intraday buy-the-dip pattern that results from hedging, according to Kolanovic.

However, should the market stage a big move that put these contracts in the money, that would force options dealers to unwind a large amount of their positions (in a massive way), warns the strategist, who was ranked the best in equity-linked strategies in last year's latest Institutional Investor survey. On a big down day such intraday selling would reach $30 billion, his model shows. "These flows could particularly impact markets given the current low liquidity environment," he wrote. Taken up first by retail traders during the 2021 meme mania, 0DTE options have gained popularity among big money managers. During the second half of 2022, such options made up more than 40% of the S&P 500's total trading volume, data compiled by Goldman Sachs Group Inc. show-that's almost double from six months ago.'''
https://www.bloomberg.com/news/articles/2023-02-15/jpmorgan-strategist-kolanovic-warns-of-volmageddon-2-0-risk-in-options-market

What this is describing is a catalyst for a Yuge 'flash crash' as these options expire daily (0CDE are daily use options) and since the system piles into products because they are chasing performance on a daily basis they really do not consider (or care) what any long term effect is to the markets. This comes into play because trading strategies that worked when interest rates were at or near zero just don't work any longer (60/40) and the buyer faces a capped amount of loss as these can just expire worthless but the 'seller' or hedge (on a long position or 'Call') has an unlimited loss potential if they sold (shorted) a call option (long poisiton). These are making up almost half of the daily volume of the daily SPX trading now and since they can move up in value by 4 digit percentages in seconds (they have short expiry as described above) i.e. they can go from worthless to worth thousands of dollars per contract in a matter of seconds-thus increasing volatility across all asset classes and that is not good if you are on the short side of that-this has increased the chances of a Flash Crash exponentially at this point and we really don't want that as the system will just buy it back 'cheap' and start the process all over again. To put in succinctly.. all of us will be here for a lot longer if they do that and then introduce CBDC…gonna be a long road extricating ourselves from that trainwreck coming-it's pretty much a race to see who implements that first: the Bank of England or the Bank of Japan…

This is earliy-similar to the Credit Default Swaps(CDS) problem that was created as a niche-product in the mid 2000s and was rolled out is small amounts at first since it was thought that no one would bet against the housing market failing in size nor take positions-again in size- to profit from that event habbening (see the Book 'Big Short') and has the potential to lead the cart before the horse in either direction with these 0CDEs-similar to ETF products
Now it's not so much the actual Options themselves that create the problem (but the growing size of it is contributting to it moar and moar) it's the fact the dealers who write these have to hedge this and that means for every one of these issued the opposite side must be taken as the 'hedge' or counter to the initial position. If the amounts were not so high this would not normally be much of a problem but since they are now (cap#2 it estinated at over $1T or %40% of the SPX's daily volume and has only gotten bigger since last year this is going to create a selling problem that will bleed into the overall markets..i.e. a domino that begets moar selling and affects all the underlying assets that these daily expiry options are tied to.
So if anyone was looking for a catalyst for the markets to start to drop-and very fast…this is looking like one of several taht could kick off a liquidity crunch at many hedge funds who are increasingly using these as there main venichle to capture performance on a daily basis-eventually one of them are going to take on too much risk and will start the daisey-chain of selling (and asset/collateral grabbing)-there are many claims on assets and collateral through hypothecation-please see these links for moar on that

The Federal Reserve and the VIX Index
from July 2012 cap# is the 'result' of that switch
NY Fed names Potter as head of markets group
The Federal Reserve Bank of New York named Simon Potter, an internal director of economic research, as the new head of its division that conducts monetary policy in the marketplace for the U.S. central bank. Potter, 51, starts as head of the New York Fed's markets group on June 30, replacing Brian Sack, 41, whose resignation was announced in April. The markets group deals directly with Wall Street and foreign central banks, carrying out Fed actions in the open market. Potter will oversee the extension of so-called Operation Twist, unveiled on Wednesday, in which the Fed sells short-term bonds and replaces them with longer-term ones in an effort to lower borrowing costs. Potter, who is now the co-head of research and statistics at the New York Fed, will also manage the Fed's System Open Market Account (SOMA).
https://www.reuters.com/article/usa-fed-markets/update-3-ny-fed-names-Potter-as-head-of-markets-group-idINL1E8HLGU020120621

The NYFRB has a VERY active trading desk in it's Building on Liberty Street-and they try to deflect inquireies that they even have one but they do
also from the 2012 VIX explosion and management episode-written in 2018

Fed Chair Powell's Stunning Admission: "The Fed Has A Short Volatility Position"
https://www.theburningplatform.com/2018/01/05/fed-chair-powells-stunning-admission-the-fed-has-a-short-volatility-position/

For moar on the really Yuge Flash Crash from 2010 (and this next one comng-again IF they allow it-will make that look like a church picnic) see here and it also has a lot of the rise of High Frequency Trading-the person that uncovered all of this was the first person to recivee a payment from the SEC's whistleblower program…but in usual fashion nothing was ever done to the firms and/or people that caused all of it
it's dated material however the only thing that has really changed is computing power and the SEC and other regulatory bodies ignoring of all of this on a much different level-they just settle everything now-and no one admits anything

Ongoing Research - Market Events and Phenomena
http://www.nanex.net/FlashCrash/OngoingResearch.html

#10410617 at 2020-08-25 05:03:25 (UTC+1)
Q Research General #13323: Chaos in Kenosha

The Quiet American Reset

The great de-coupling is here. The U.S. now has plan a to purge Chinese tech companies fully from America's internet, creating what the Trump administration has dubbed the Clean Network. It mirrors the White House's existing 5G Clean Path initiative to remove all Chinese components from systems 'everywhere', and which now extends it to everything tech on the 'net.

China fears a financial 'Iron Curtain' is about to fall - a complete expulsion from the dollar sphere. In fact, soft capital control is already birthing, with Bloomberg reporting that the U.S. is now asking colleges and universities to divest from Chinese holdings in their endowments, "warning schools in a letter this last week, to get ahead of potentially more onerous measures [coming] on those holding the shares".

Reportedly, the Chinese leadership annual August Beidaihe retreat, agreed (should the recommendations be subsequently endorsed at the Central Committee plenum in October) that China should prepare for war; build food and energy reserves; establish the Eurasian continental economic system, recover its overseas gold and broaden the global RMB settlement system (including its digital Yuan) - and prepare for the complete interruption of relations with the U.S.

Yet, whilst the media focus is all on this 'tech' and 'sphere' de-coupling, something profound - and quite separate - is already shaping the global monetary order (quite apart from likely Chinese exclusion).

It is set, in the longer term, to be more revolutionary - and contentious - than even 'de-coupling'. It is getting sparse attention.

However, as it becomes ever more evident that no 'V' shaped economic rebound will be arriving soon - as the U.S. 'house' catches fire again with Coronavirus over the autumn and winter, presaging a further economic closedown - the chances are that this bombshell will indeed ignite.

First, a little background:

Earlier this month, Zero Hedge published a remarkable interview with two former Fed economists - Simon Potter (who was also the former head of the Fed's Plunge Protection Team for many years) and Julia Coronado - both of whom have tremendous impact on thinking at the Fed.

They hinted at the Fed's 'last ditch' stimulus and bailout strategy (i.e. should the U.S. economy be further stalled by Coronavirus): It is 'to wire' digital money directly into Americans' smartphone financial apps, bypassing the banking system entirely.

"The two propose creating a monetary tool that they call 'recession insurance bonds', which draw on some of the advances in digital payments and 'wired' instantly to Americans":

"As Coronado explains the details, Congress would grant the Federal Reserve an additional tool for providing support - say, a percent of GDP [in a lump sum that would be divided equally and distributed] to households in a recession. Recession insurance bonds would be zero-coupon securities, a contingent asset of households that would basically lie in wait. The trigger could be reaching the zero lower bound on interest rates or, as economist Claudia Sahm has proposed, a 0.5 percentage point increase in the unemployment rate. The Fed would then activate the securities and deposit the funds digitally in households' apps.

https://www.strategic-culture.org/news/2020/08/24/the-quiet-american-reset/

#10277842 at 2020-08-13 22:05:56 (UTC+1)
Q Research General #13154: Happy Birthday Sarah Edition

A Preview Of The Fed's Coming Direct Money Transfers: Brainard Says Fed Collaborating With MIT On "Hypothetical" Digital Currency

One week ago, we published a remarkable interview with two former Fed economists - Simon Potter and Julia Coronado - who have tremendous impact and influence on prevailing thinking at the Federal Reserve, and who hinted at the Fed's last ditch reflationary strategy: wiring digital money into the bank accounts of Americans, bypassing the reserve system entirely, and sparking an inflationary conflagration. As we said last Monday, "the two propose creating a monetary tool that they call recession insurance bonds, which draw on some of the advances in digital payments, which will be wired instantly to Americans."

"One of the issues Congress had in passing the Cares Act is identifying who's got mainly tip income, who doesn't have sick days. If society wanted, you could use large datasets to direct fiscal transfers to those people." - Bloomberg Interview with Coronado And Potter

And while this idea may have seemed absolutely ludicrous as recently as just one year ago, the fact that the just as ludicrous Helicopter Money is now de facto policy means that direct deposits of cash by the Fed into individual accounts is becoming increasingly probable, the only thing missing is the "digital currency" that would be used by the central bank.

Addressing this issue, on Thursday afternoon, Federal Reserve Governor Lael Brainard hinted once again at the coming monetary revolution when she said that the Fed is studying the opportunities and challenges presented by central bank digital currencies.

"To enhance the Federal Reserve's understanding of digital currencies, the Federal Reserve Bank of Boston is collaborating with researchers at the Massachusetts Institute of Technology in a multi-year effort to build and test a hypothetical digital currency oriented to central bank uses."

The objectives of our research and experimentation across the Federal Reserve System are to assess the safety and efficiency of digital currency systems, to inform our understanding of private-sector arrangements, and to give us hands-on experience to understand the opportunities and limitations of possible technologies for digital forms of central bank money. These efforts are intended to ensure that we fully understand the potential as well as the associated risks and possible unintended consequences that new technologies present in the payments arena.

In prepared remarks of a speech titled simply enough "An Update on Digital Currencies" and prepared for delivery Thursday at a Fed technology event, Brainard said that "a significant policy process would be required to consider the issuance of a CBDC, along with extensive deliberations and engagement with other parts of the federal government and a broad set of other stakeholders."

https://www.zerohedge.com/markets/preview-feds-coming-direct-money-transfers-brainard-says-fed-collaborating-mit-hypothetical

#9768439 at 2020-06-27 19:27:49 (UTC+1)
Q Research General #12502: At The Ready; FF Watch

>>9767267 (PB)
I saw this article and did a little digging.
Interesting happenings at the LBMA (London Bullion Market Association):
Isabelle Strauss-Kahn of Banque de Frabce has replaced Simon Potter of the New York Fed on the board of directors.

https://www.zerohedge.com/markets/central-banker-musical-chairs-fed-exits-lbma-board-banque-de-france-joins

Her brother-in law, Dominique Stauss-Kahn was charged with a number of sex related crimes and aspired to become president of France. Although acquitted, he was removed as head of the IMF and replaced with Christine LeGarde.

https://time.com/3919026/strauss-kahn-acquitted-lost/

What these articles fail to show is that the Strauss-Kahn families are linked to the Rothschilds.

https://www.counterpunch.org/2013/02/22/the-fall-and-rise-of-the-french-rothschilds/

#9767267 at 2020-06-27 17:16:14 (UTC+1)
Q Research General #12501: Be Best Edition

Central Banker Musical Chairs: Fed Exits LBMA Board, Banque de France Joins

For a group famous for its caution in appearing associated with and endorsing gold, Western central bankers seem to have made an exception when it comes to sitting on the board of directors of the world's largest bullion bank gold cartel, the London Bullion Market Association (LBMA). But maybe that's the point. Because, if central banks and their proxies are close to the action in the gold market, they will be able to control their interests, as well as influence and control others.

Which may explain why Isabelle Strauss-Kahn, former Market Operations director of the Banque de France (BdF), and formerly at the World Bank and Bank for International Settlements (BIS), is being appointed to the Board of the LBMA as an "Independent" non-executive director, with effect from 1st July. The Banque de France market operations role also included Strauss-Kahn being in charge of the French central bank's gold and FX reserve management.

Until the Music Stops

In a classic case of musical chairs, Strauss-Kahn's new appointment comes from a vacancy which has arisen due to the departure from another "Independent" LBMA board non-executive director, former Federal Reserve Bank of New York (FRBNY) head of FED Markets Group, Simon Potter. Potter had left the Fed in May 2019 and joined the LBMA board just last January.

But although Potter, who was also system open market account manager when at the FRBNY, had a brief stint on the LBMA, it coincided with some memorable gold market action when both the London and COMEX gold markets blew up in the week of 23 March, and when the LBMA and COMEX hit the panic button, rolling out there "nothing to see here" messages for the mainstream media.

The Other Strauss-Khan

Isabelle Strauss-Kahn, who is also a member of the advisory board of the LBMA cheerleading organization, the World Gold Council , additionally has the distinction of being the sister-in-law of the infamous Dominique Strauss-Kahn (DSK) who many people will recognize as former managing director of the International Monetary Fund (IMF) from 2007 until that gig was cut short by his inglorious IMF exit in May 2011. Isabelle's husband is Marc-Olivier Strauss-Kahn (MOSK), career executive at the Banque de France, and older brother of DSK.

https://www.zerohedge.com/markets/central-banker-musical-chairs-fed-exits-lbma-board-banque-de-france-joins

#8357647 at 2020-03-09 16:34:29 (UTC+1)
Q Research General #10699: Panicking Markets Edition

>>8357582
found it. Simon Potter.
Was in May these two were shown the door.

Richard Dzina and Simon Potter to Step Down from New York Fed

The Federal Reserve Bank of New York today announced that Simon Potter, executive vice president and head of the Markets Group, and Richard Dzina, executive vice president and head of the Financial Services Group, will be stepping down from their respective roles effective June 1, 2019. The New York Fed will conduct a broad and thorough search for their successors.

John C. Williams, president and chief executive officer of the New York Fed, named Ray Testa, chief operating officer of the Markets Group, as interim head of the Markets Group, and Chris Armstrong, senior vice president of cash operations, as interim head of the Financial Services Group, starting immediately. The role of product director for the Wholesale Product Office will revert to Michael Strine, the Bank's first vice president and chief operating officer, until a new head of the Financial Services Group is in place.

Mr. Potter joined the New York Fed in June 1998 as an economist after a career in academia. Mr. Potter served as director of economic research and co-head of the Research and Statistics Group at the New York Fed, prior to becoming head of the Markets Group in June 2012. In this role, he oversaw the implementation of domestic open market and foreign exchange trading operations on behalf of the Federal Open Market Committee (FOMC), the execution of fiscal agent support for the U.S. Treasury, the provision of account services to foreign and international monetary authorities, and the administration and production of reference interest rates for the U.S. money markets. Mr. Potter has played a prominent role in the Federal Reserve's financial stability efforts, including by contributing to the design of the 2009 U.S. bank stress tests, as a member of the international Macroeconomic Assessment Group that supported the Basel Committee's work to strengthen bank capital standards and, most recently, as Chair of the Global Foreign Exchange Committee.
https://www.newyorkfed.org/newsevents/news/aboutthefed/2019/20190528

#7081460 at 2019-07-18 15:25:16 (UTC+1)
Q Research General #9061: It's Going To Be Staggering Edition

>>7081347
from May 28th, 2019
The Head Of The Plunge Protection Team Is Quitting

Back in the summer of 2012, a historic if largely under-reported change took place at the New York Fed, when Brian Sack, the former head of the Fed's Markets group, also known as the Plunge Protection Team's trading arm, was replaced by former UCLA economist, Simon Potter.

Potter's arrival was most notable for not only taking over the Fed's QE baton from Sack, currently a director at quant trading giant DE Shaw, but because his arrival also marked the start of a multi-year crash in the VIX future, which collapsed the month Potter took over and has hit ever steeper lows ever since (with the exception of the occasional VIX explosion)
Several years later, it was Zero Hedge that also first reported on the practical implications of Potter's apparent market intervention, when just a few months later, during the October 22-24, 2012 FOMC meeting, now Fed Chair Jerome Powell made the following striking remarks (which was disclosed last year as part of the Fed's declassification of its FOMC transcripts):

[W]hen it is time for us to sell, or even to stop buying, the response could be quite strong; there is every reason to expect a strong response. So there are a couple of ways to look at it. It is about $1.2 trillion in sales; you take 60 months, you get about $20 billion a month. That is a very doable thing, it sounds like, in a market where the norm by the middle of next year is $80 billion a month. Another way to look at it, though, is that it's not so much the sale, the duration; it's also unloading our short volatility position.

Fed's VIX trading aside, this was the most fascinating part of Powell's speech, one which contained some truly unprecedented - for a future Fed chairman - admissions:

I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.

We bring all this up because moments ago, the New York Fed announced that Simon Potter, the chief operating officer of the Markets Group, and the man who single-handedly implemented the Fed's short volatility position, will be retiring and not only that, but he will be taking with him the second most important person at the NY Fed's "Plunge Protection Team", the head of the Financial Services Group. From the press release:

The Federal Reserve Bank of New York today announced that Simon Potter, executive vice president and head of the Markets Group, and Richard Dzina, executive vice president and head of the Financial Services Group, will be stepping down from their respective roles effective June 1, 2019.

John C. Williams, president and chief executive officer of the New York Fed, named Ray Testa, chief operating officer of the Markets Group, as interim head of the Markets Group, and Chris Armstrong, senior vice president of cash operations, as interim head of the Financial Services Group, starting immediately. The role of product director for the Wholesale Product Office will revert to Michael Strine, the Bank's first vice president and chief operating officer, until a new head of the Financial Services Group is in place.

It is worth noting that a replacement for Potter has yet to be picked and "The New York Fed will conduct a broad and thorough search for their successors." Expect Potter's successor to be intimately familiar with selling VIX, buying ETFs, ramping HFTs stops, triggering upward momentum cascades, and certainly knowing all there is to know about record stock buybacks.

Some more details on the historic transition, from the press release:

Mr. Potter joined the New York Fed in June 1998 as an economist after a career in academia. Mr. Potter served as director of economic research and co-head of the Research and Statistics Group at the New York Fed, prior to becoming head of the Markets Group in June 2012.
rest at link
https://www.zerohedge.com/news/2019-05-28/head-plunge-protection-team-quitting

#6616406 at 2019-05-29 13:38:54 (UTC+1)
Q Research General #8460: Forecast Update: Wednesday Welcomes Winning Edition

Baker - not mine - notable from LB
>>6616222
>https:// www.zerohedge.com/news/2019-05-28/head-plunge-protection-team-quitting

"the New York Fed announced that Simon Potter, the chief operating officer of the Markets Group, and the man who single-handedly implemented the Fed's short volatility position, will be retiring and not only that, but he will be taking with him the second most important person at the NY Fed's "Plunge Protection Team", the head of the Financial Services Group"

#6609370 at 2019-05-28 17:09:30 (UTC+1)
Q Research General #8451: Kitchen Collab Edition

Top officials at New York Fed stepping down

NEW YORK (Reuters) - The Federal Reserve Bank of New York said two top executives would step down on June 1, leaving an interim figure in charge of the U.S. central bank's market operations.

Simon Potter, who as head of the Markets Group runs the broader Federal Reserve system's market operations and asset holdings, is stepping down, as is Richard Dzina, head of the Financial Services Group, the New York Fed said in a statement.

New York Fed President John Williams named Ray Testa, chief operating officer of the Markets Group, as its interim head and also named an interim chief from within the regional bank to run the Financial Services Group.

The Markets Group is charged with trading to implement the Fed's interest rate policy and also manages relationships between the central bank and Wall Street.

A spokeswoman, Suzanne Elio, declined to comment beyond the statement.

Potter, an economist, is a veteran of more than two decades at the New York Fed and has run the Markets Group since June 2012.

The group has had an enlarged role in markets because of the Fed's massive asset purchases to support the U.S. economy in the aftermath of the 2008 global financial crisis. The central bank currently holds nearly $4 trillion in assets.

"I'm not sure if there is ever a good time for someone like Simon to leave," said Michael Gapen, chief U.S. economist at Barclays in New York. "He's been there for a long time and has a difficult job. He has helped lay out the framework on how to manage the Fed's balance sheet and the plumbing of money markets."
https://www.reuters.com/article/us-usa-fed-markets/top-officials-at-new-york-fed-stepping-down-idUSKCN1SY1UY?il=0

#6609164 at 2019-05-28 16:35:50 (UTC+1)
Q Research General #8450: God Bless The QRG Edition

The Head Of The Plunge Protection Team Is Quitting

Back in the summer of 2012, a historic if largely under-reported change took place at the New York Fed, when Brian Sack, the former head of the Fed's Markets group, also known as the Plunge Protection Team's trading arm, was replaced by former UCLA economist, Simon Potter.

Potter's arrival was most notable for not only taking over the Fed's QE baton from Sack, currently a director at quant trading giant DE Shaw, but because his arrival also marked the start of a multi-year crash in the VIX future, which collapsed the month Potter took over and has hit ever steeper lows ever since (with the exception of the occasional VIX explosion).
FED Transcripts.
When it is time for us to sell, or even to stop buying, the response could be quite strong; there is every reason to expect a strong response. So there are a couple of ways to look at it. It is about $1.2 trillion in sales; you take 60 months, you get about $20 billion a month. That is a very doable thing, it sounds like, in a market where the norm by the middle of next year is $80 billion a month. Another way to look at it, though, is that it's not so much the sale, the duration; it's also unloading our short volatility position.
We bring all this up because moments ago, the New York Fed announced that Simon Potter, the chief operating officer of the Markets Group, and the man who single-handedly implemented the Fed's short volatility position, will be retiring and not only that, but he will be taking with him the second most important person at the NY Fed's "Plunge Protection Team", the head of the Financial Services Group. From the press release:


The Federal Reserve Bank of New York today announced that Simon Potter, executive vice president and head of the Markets Group, and Richard Dzina, executive vice president and head of the Financial Services Group, will be stepping down from their respective roles effective June 1, 2019.

John C. Williams, president and chief executive officer of the New York Fed, named Ray Testa, chief operating officer of the Markets Group, as interim head of the Markets Group, and Chris Armstrong, senior vice president of cash operations, as interim head of the Financial Services Group, starting immediately. The role of product director for the Wholesale Product Office will revert to Michael Strine, the Bank's first vice president and chief operating officer, until a new head of the Financial Services Group is in place.

It is worth noting that a replacement for Potter has yet to be picked and "The New York Fed will conduct a broad and thorough search for their successors." Expect Potter's successor to be intimately familiar with selling VIX, buying ETFs, ramping HFTs stops, triggering upward momentum cascades, and certainly knowing all there is to know about record stock buybacks.

Some more details on the historic transition, from the press release:

Mr. Potter joined the New York Fed in June 1998 as an economist after a career in academia. Mr. Potter served as director of economic research and co-head of the Research and Statistics Group at the New York Fed, prior to becoming head of the Markets Group in June 2012. In this role, he oversaw the implementation of domestic open market and foreign exchange trading operations on behalf of the Federal Open Market Committee (FOMC), the execution of fiscal agent support for the U.S. Treasury, the provision of account services to foreign and international monetary authorities, and the administration and production of reference interest rates for the U.S. money markets. Mr. Potter has played a prominent role in the Federal Reserve's financial stability efforts, including by contributing to the design of the 2009 U.S. bank stress tests, as a member of the international Macroeconomic Assessment Group that supported the Basel Committee's work to strengthen bank capital standards and, most recently, as Chair of the Global Foreign Exchange Committee.

"I want to thank Simon for his leadership over the years," said Mr. Williams. "His contributions have been of great value to the Bank, the FOMC and the System. Most recently, his deep experience in and understanding of markets were critical in helping the Committee think through and execute a path toward monetary policy normalization, and he has been a leading and influential voice globally on reference rate reform."
And speaking of their future endeavors, one wonders which hedge fund Simon Potter will arrive at next: with DE Shaw employing his predecessor, something tells us that either Citadel or Renaissance may soon have a new Plunge Protecting trader in its ranks.
https://www.zerohedge.com/news/2019-05-28/head-plunge-protection-team-quitting

#6415578 at 2019-05-05 00:01:10 (UTC+1)
Q Research General #8204: There is no Escape Edition

>>6415520
>After beginning this practice, the Fed's chief trader, Simon Potter, realized it could be used to raise interest rates without expelling excess reserves from the Fed, by sucking liquidity out of the short-term markets.

This the liquidity sump pump this time around.crash incoming 4-6months.

#6415520 at 2019-05-04 23:52:06 (UTC+1)
Q Research General #8204: There is no Escape Edition

The Fed Will Give Banks A $36 Billion Taxpayer-Funded Subsidy This Year

Before 2009, the Fed did not pay interest on banks' excess reserves held at the Fed. This practice was introduced as a taxpayer-funded subsidy to the banks during the crisis (taxpayer-funded because the Fed turns over any profit at the end of the year to the Treasury).

After beginning this practice, the Fed's chief trader, Simon Potter, realized it could be used to raise interest rates without expelling excess reserves from the Fed, by sucking liquidity out of the short-term markets. In fall 2015, it began raising the interest rate on excess reserves, with the anticipated effect.

At a current rate of about $36 billion a year, this is a cost to the Treasury that is indefensible. This amount is about half the budget for food stamps, for example, which politicians want to cut. There is no provision for these funds ever to be paid back. It is welfare for the bankers.

https://www.zerohedge.com/news/2019-05-04/fed-will-give-banks-36-billion-taxpayer-funded-subsidy-year