The Fed injected a record amount of liquidity this morning via its Repo Market Operation to supply dealers in the interbank market. While investors may be reassured by the huge 1293 point rally on the Dow yesterday, the global contagion and its impact are just beginning. Don’t be surprised to see a 40-50% correction in the Dow Jones over the next month.

I’ve been keeping an eye on the Fed Repo Operations and was quite surprised this morning to see the Fed has already injected a record $120 billion into the market. Again, this is the largest single-day amount of Fed liquidity, going back to the first Repo Operation on September 17, 2019:

As you can see, I had to enlarge the chart to accommodate the Fed’s newest liquidity injection this morning… and the day isn’t over yet… ... Read more »