Understanding the Reverse Repo Frenzy!! How Does the Supplementary Leverage Ratio Impact Bitcoin & Stocks?!

## Welcome to the Strategic Investor Productions Channel
Welcome to the [Strategic Investor Productions Channel](https://www.youtube.com/channel/UCM18z5_6tKCIDWjiEtMkh9Q)! In this video, we are going to explore the fascinating relationship between the reverse repo market (RRP) and the supplemental leverage ratio (SLR). Many people underestimate the significance of the reverse repo market, but some believe that it might be indicating something unusual happening in the financial world. There is a considerable amount of disagreement regarding this topic, similar to the confusion surrounding the 2019 repo bailout. Looking back, the 2019 repo market events proved to be a warning sign of things to come. Will we also consider the reverse repo market as a crucial indicator? Spoiler alert: we think so, and this video explains why.

## Understanding the Reverse Repo Market and SLR
To fully comprehend the reverse repo market and the supplemental leverage ratio, it’s essential to break down these concepts. A reverse repo market is the opposite of a repo market. In a repo market, individuals can temporarily sell their securities for cash, with an agreement to repurchase them with interest at a predefined date. On the other hand, the reverse repo market allows individuals to purchase securities with the intention of selling them at a higher price on a specified date.

The supplemental leverage ratio (SLR) measures a banking organization’s leverage by considering both on and off-balance sheet factors. It involves dividing tier 1 capital (composed of shareholders’ equity and retained earnings) by the total leverage exposure. This ratio serves as a primary indicator of a bank’s financial health.

## A Brief History of Reverse Repo and SLR
To gain a deeper understanding, let’s take a quick look at the history of reverse repos and the supplemental leverage ratio:

– 2012: US regulators propose the SLR.
– 2013: The SLR is finalized, and the enhanced SLR (ESLR) is proposed.
– 2014: The ESLR is finalized, and revisions to the SLR denominator are proposed.
– 2015: Mandatory disclosures of the SLR are required.
– March 2019: Both SLR and ESLR become mandatory.
– September 2019: The St. Louis Fed publishes an article on the need for a standing repo facility.
– March 2020: The repo market required a bailout as the Federal Reserve intervenes for the first time since the Great Recession.
– March 2020: The CARES Act, a $2.3 trillion stimulus package, is signed into law.
– April 2020: The Federal Reserve announces temporary FEMA repo facilities.
– December 2020: Stimulus Package 4, worth $900 billion, is signed into law.
– March 2021: The American Rescue Plan, a $1.9 trillion stimulus package, is signed into law.
– March 2021: The SLR exemptions expire, and the reverse repo market goes parabolic.
– June 2021: The Fed increases the reverse repo market rate.
– July 2021: The Federal Reserve announces two new standing repo facilities: domestic and FEMA.

## Correlations and Key Events
As we examine these events from a different perspective, it becomes evident that they are interconnected. Let’s delve into some major events in detail:

– March 2020: The CARES Act is signed into law, providing direct cash payments and increasing deposits in depository institutions.
– April 2020: The Federal Reserve temporarily excludes treasuries and bank reserves from SLR calculations, allowing banks to take more risk.
– March 31, 2021: The SLR exemption expires, affecting U.S. banks’ balance sheets.
– Reverse repos: They witnessed significant activity after the CARES Act in March 2020, but the SLR exemption announcement in April 2020 reduced their need. However, the reverse repo market saw a surge again after the SLR exemption expired on March 31, 2021.
– December 21, 2020: Stimulus Package 4, worth $900 billion, is signed into law.
– March 11, 2021: President Joe Biden signs the American Rescue Plan into law, providing $1.9 trillion in relief.

By analyzing these events, we start to see the correlation between the reverse repo market, SLR exemptions, and various stimulus packages. This video examines the implications of these connections and ponders what they might signify for future stimulus packages and the financial landscape.

Thank you for watching! We understand that this is a complex topic that hasn’t received much attention in the media. We hope that our unique perspective and analysis have provided value to you. As a new channel, we appreciate your patience and support. Don’t forget to like this video to help with the algorithm and subscribe with the bell icon for notifications on new content. Have a wonderful day, strategic investors!

Keywords/tags associated with this video: Reverse Repo, Repo, Reverse Repo Market, Repo Market, SLR, Supplemental Leverage Ratio, Bitcoin, Cryptocurrency, BTC, Fiscal Stimulus, Quantitative Easing, QE, Dollar, Treasury, Treasuries, Treasury Yield, Banking.

*Transcript Source:*

[Strategic Investor Productions Channel](https://www.youtube.com/channel/UCM18z5_6tKCIDWjiEtMkh9Q)

Welcome to the Strategic Investor Productions Channel.

In this video, we are going to look at the relationship between the reverse repo market (RRP) and the supplemental leverage ratio (SLR).

While many people think the reverse repo market is no big deal, others believe it must be signaling something strange is going on that we should be paying attention to. One thing is for certain, there seems to be a lot of disagreement on the topic.

It seems to be analyzed with similar confusion to the 2019 repo bail out at the time of that happening. Hind sight is clear, the 2019 repo market craziness was a canary in the coal mine for events to come.

Will we also look back on the reverse repo market madness in the same way?

Spoiler alert, I think we will and this video explains why.

We also take a look at bank reserves (fed reserves), fiscal stimulus, quantitative easing (QE), Bitcoin & cryptocurrency, and the US Dollar.

We take all of this information and try to use it to help formulate an opinion of what it could mean as we go forward with future stimulus packages like The Build Back Better Proposal and as treasury yields start to rise.

Could they be up to something with the Standing FIMA Repo Facility and Standing Domestic Repo Facility they are creating?

These are all thoughts we explore in this video.

Thanks for taking the time to watch!

This is a really complex topic and hasn’t been getting a lot of attention in the media so I hope its a new perspective that brought you guys value.

We are a brand new channel so we appreciate your patience as we learn how to YouTube correctly.

Please like this video to help with the algorithm and subscribe with the bell icon to get notifications when we post new content like this.

Have a wonderful day all of you strategic investors!