As the money numbers shown below indicate, money growth is not signalling a continued recession.
However, credit spreads indicate profit opportunities for institutions with portfolio risk skills.
PROFIT OPPORTUNITIES
Recently a Paterson client locked in 22% on AAA rates securities for 9 months, bringing in a profit of nearly $2 million. If your institution is interested in Paterson's Money Market Arbitrage program, please contact us right away. Sellers are looking to clean out their portfolios by the end of the year.
10 Years of Growth in 10 Weeks.
Without this addition to reserves, money would not be growing as fast.
MZM
M2 Growing as Well
Loan Growth Slows
SUMMARY OF FED ACTION
Without the prompt and resolute action by the Board of Governors of the Federal Reserve System, the US and world economies would be collapsing.
With Fed action, the recession will likely last only a few years.
Money growth is a reassuring fact in this convoluted world.
Keep an eye on the monetary base in the months to come. If the Fed stops adding to the base, it's a sign that the markets are healthier.
INTEREST RATES
There is no sign of inflation in the bond market.
For the last 10 years there has been little change in long-term rates and none is expected in the future.
TACTICS
Money market arbitrage has become the most profitable thing for financial institutions.
Continue to fund at the short end of the curve, and match the book with high yeilding paper guaranteed by the Fed.
A billion dollar portfolio of deposits will purchase $100 million in profits in one year on AAA rated paper.
STRATEGY
Brief the board on the profit opportunities in short term paper and obtain authorization to expand the Money Market Arbitrage program.
