It’s Not The Economy, It’s The Liquidity, Stupid.

It’s Not The Economy, It’s The Liquidity, Stupid.

I'd be inclined to say US equities (if not necessarily risk assets more generally) will be under pressure in the new week, but I suppose the same "don't bet against a liquidity-driven market" caveat still applies, especially went there's ample scope for key investor cohorts to get pulled into the "melt-up". Domestic unrest is roiling America, and there are multiple direct channels through which the societal tumult could impact markets. Most obviously, street protests, violent clashes with poli
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6 thoughts on “It’s Not The Economy, It’s The Liquidity, Stupid.

  1. I do think equities are too high due to Fed supplied liquidity. However, that was also true through Feb 2020- when I was in the market.
    I am bearish now ( in cash) because I think demand is going to fall because:
    1.we will have too many unemployed for a lot longer than the market is currently pricing in
    2. supply chains will move, causing higher prices
    3. chaos in our country- from pandemic, protests snd riots, upcoming elections
    4. Increased likelihood of China becoming even more powerful through takeover of countries ( Hong Kong, Taiwan and alliances with global markets ( Germany, Africa and S. America)

    1. I agree with you that demand are likely to fall, but I guess that all of have learned the hard way that the economical reality is pretty far away from the financial markets

  2. The Fed as a God narrative is hardly rational. “It’s not a Ponzi Scheme If You Have a Printing Press” and the corollary that providing unlimited amounts of liquidity to markets is at worst benign, but entails no real negative consequences, are assumptions that will soon be tested

  3. Value is dead and the Fed has blood on their hands. Too much money chasing too few stocks. TINA. Business needn’t make money as long as stocks do.

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