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Pam and Russ Martens: The Fed is killing Wall Street's two main functions
Price Discovery and Prudent Capital Allocation
By Pam and Russ Martens
Wall Street on Parade
Saturday, April 11, 2020
On Thursday, knowing that a three-day Easter weekend was coming and the attention of the public would be elsewhere, the Federal Reserve announced that it would allow two of its emergency lending programs to begin buying junk bonds. Those are bonds with less than an investment-grade credit rating, meaning they have a greater likelihood of defaulting.
The Fed is not simply accepting junk bonds as collateral for loans, it will actually be buying junk bonds -- potentially hundreds of billions of dollars of them.
... Dispatch continues below ...
Great Bear Expands Shallow High-Grade Gold
at LP Fault Including 42.70 g/t Over 3 Meters
Thursday, April 9, 2020
VANCOUVER, British Columbia, Canada -- Great Bear Resources Ltd. (TSX-V: GBR) today reported results from its ongoing fully funded $21 million exploration program at its 100-percent owned flagship Dixie Project in the Red Lake district of Ontario.
The company has completed 83 of approximately 300 planned drill holes into the LP Fault target, as part of its 5-kilometer-long by 500-meter-deep grid drill program.
Gold mineralization has been intersected in all the drill holes for which assays have been returned to date. ...
Drill results highlights:
-- New lateral and vertical drill spacing on 25–100 meter centers has confirmed apparent continuity of gold mineralization on multiple drill sections.
-- Drill hole BR-101 intersected multiple shallow mineralized intervals along 110 metres of core length. Assays include 42.70 grams per tonne gold over 3 meters, including 118.00 grams per tonne gold over a half meter, within a broader interval of 4.24 grams per tonne gold over 52.15 meters. ...
... For the remainder of the announcement:
Two of the popular junk bond ETFs, iShares iBoxx High Yield Corporate Bond ETF (symbol HYG) and SPDR Bloomberg Barclays High Yield Bond ETF (symbol JNK) closed the trading day on Thursday up 6.55 and 6.71 percent, respectively, on the announcement. Those ETFs had been plunging in price for most of March.
For years now prudent investors have been forgoing risky investments like junk bond ETFs and accepting a much tinier yield on U.S. Treasury securities. Now high rollers like hedge funds that bought junk bonds and junk bond ETFs and received the higher yields are getting bailed out of these risky bets. The markets now will price junk bonds on a closer plane with Treasury securities, assuming the Fed will not let them fail.
This is effectively killing the pricing mechanism of Wall Street. ...
... For the remainder of the report:
Toast to a free gold market
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