Is this a Test from the Fed?

ZeroHedge came out with an article on based on information out of MS (Morgan Stanley) earlier this week which had an effect on the markets as a whole.   The information from MS was that the fed would inject 1 trillion in POMO purchases.  What is POMO you might ask?  The acronym stands for Permanent Open Market Operations and is the buying or selling of Treasury securities on an outright basis adds or drains the reserves available in the banking system.  This is done to offset imbalances in the FEDs balance sheet.  A purchase of 1 Trillion dollars means that somewhere in their he is offsetting a 1 Trillion dollar loss or upcoming loss.  MS told the markets Tuesday the 14th this purchase was going to take place on the September 21st.  Markets sold off, gold climbed and the dollar plunged.  Quickly thereafter MS recanted what they said which subtly reversed the stock market after (gold held its own and the dollar still ended down for the week).  ZeroHedge believes that the real event will take place in November after the elections.  I believe this could be the case and that this was a test to see how the market would react.  To announce something like this, the FED must need the injection into his balance sheet, but cannot accomplish if it will have a significant impact on elections. [ Read more ... ]