Monday, December 6, 2010
POMO Stimulus Indicator At New High and Still Climbing
Last week on the blog I showed an indicator that measured the amount of POMO stimulus the Fed has injected into the system over a 1-month (20 day) timeframe. As a review POMO stands for Permanent Open Market Operations and it is how the Fed goes into the open market to buy (or sell) treasury securities. The net effect of this buying is an influx of cash into the system. It appears a portion of that cash makes its way through the banking system and into the stock market. It also appears that the net effect of all this Fed buying is a positive influence on the stock market.