Goldman: Liquidity Hasn’t Been This Bad Since COVID Crash
US equities have been a veritable roller coaster lately. Maybe you noticed.
Tuesday was no exception. Another aggressive upside move into the close left the S&P with its best three-day gain since 2020 (figure below). The world's risk asset benchmark par excellence has now retraced half of its January peak-to-trough decline.
The same dynamics that contributed to Monday's epic squeeze were doubtlessly in play. It helped that Jim Bullard joined the chorus of Fed officials actively seeking to
So the long term picture is the Fed is tightening, the economy is slowing, and there is huge geo political risk, buy the dip!!!
The poor bastards that are getting killed with inflation are going to have to pay a lot more for their mortgages soon, double whammy. I’m sure the economy will be fine….
Thanks. I was blissfully unaware of the liquidity drought.
H-Man, this dog will hunt and find prey in February, after that maybe an empty field.
What is the cause of the low liquidity?
@jyl – I am wondering the same thing. Might it partly be that some high-frequency traders are folding?
Looking further out, I also wonder what happens if this continues and algo -based trading systems come to further dominate transaction volumes. Won’t this further divorce the overall market from the economy as well as all of that quaint old stuff like earnings and valuations?
And as algos battle algos, where does the little guy stand? How do you invest? I guess you just would watch buy-back and M&A flows.