10 replies to this topic

[NAV]

There's only one thing that matters to the markets. Liquidity !

 

It was that monstrous liquidity injection by the Fed that kickstarted this rally in 2009. Those who did not listen to the Fed, then, paid the price. Now the cycle has turned. Once the Fed starts the tightening cycle, it will not end with one or two increases. They will look at the employment numbers and the CPI inflation and continue to raise the rates. Not to mention the unwinding of the balance sheet that has begun. They will continue with the tightening until the back of the economy is broken. They have made it loud and clear. Are you listening ? The fundmental trend has changed.

 

All this Trump rally, tax cuts, healthcare reform, infrastructure spending, obstruction of justice blah blah are irrelavant. 

 

Now we just need to wait for the technical picture to change. The S&P and DOW trends are still intact. But the Nasdaq is broken. I will update when the technical picture changes, with IT sells. For now i am in cash and will not trade until Nasdaq breaks into new ATHs, which i doubt will happen. 

Edited by NAV, 23 June 2017 - 12:48 AM.

[fib_1618]

There's only one thing that matters to the markets. Liquidity !

 

It was that monstrous liquidity injection by the Fed that kick started this rally in 2009. Those who did not listen to the Fed, then, paid the price.

 

[Data]

Since the Fed can't directly buy stocks, they farmed it out to friendly foreign central banks.

 

Swiss National Banks owns 80 billion in US stocks

 

Liquidity didn't kickstart.  It is the only thing.   The market collapses as soon as it's taken away. See 2010 and 2011 when two phases of QE ended.

 

The latest month shows the ECB and BOJ purchases amounting to 160 billion dollars.   Since each has driven rates negative several years ago, their fiscal deficits have dramatically declined.   They could easily cut their QEs to one-fourth their size to monetize their governments' debts.  

 

It really comes down to whether there will be some periodic deleveraging  in the equity market since the asset purchases are continuing.

Edited by Data, 23 June 2017 - 09:38 AM.

[da_cheif]

did i know about liquidity when i got long  on 3/9/09? and callled for  the epicenter?

[da_cheif]

 

There's only one thing that matters to the markets. Liquidity !

 

It was that monstrous liquidity injection by the Fed that kick started this rally in 2009. Those who did not listen to the Fed, then, paid the price.

 

 

a picture is worth a thousand words eh?

[Data]

There was a lot more going on in monetary policy during that long time period than just the Fed Funds rate. 

[MaryAM]

I agree.

https://fred.stlouis...org/series/MULT

[Data]

There is a long history of central bank asset purchases over that period on an intermittent basis.   This is the longest stretch by far.  It requires more digging into government records than just pulling up a stockchart.

Edited by Data, 24 June 2017 - 11:58 AM.

[Data]

deleted

Edited by Data, 24 June 2017 - 12:15 PM.

[q4wer]

There will be a criticism in the future to blame the QE, next time No more country to buy USA bond, cause oil as energy will be replaced by water.