- Retail traders on Reddit are theorizing that signs of a market crash are being signaled by a complex Fed program.
- Reddittors are closely watching the growing use by big firms of the Fed’s reverse repo facility.
- A number of theories have surfaced on Superstonk, a subreddit with 679,000 members.
Retail traders on Reddit are theorizing that a market crash is imminent, with one sign of a crash trumping all others: the Federal Reserve’s overnight reverse-repurchase agreement facility.
A recent Bloomberg report revealed how this complex facility has drawn the eye of Redditors on a forum called Superstonk, a subreddit that boasts 679,000 members, far smaller than Wall Street Bets’ 11 million.
Similar to the now-famous Wall Street Bets, Superstonk is dedicated to discussing business and stocks, specifically GameStop. In the forum’s keen observation of the Fed’s reverse repo facility, it differs.
The Fed’s reverse repo facility allows big institutions – mostly big banks and money-market mutual funds – to buy securities from the Fed with an agreement to sell them back to the central bank for a specified price at a specific time.