Best ever Liquidity Trader report Lee.
The shutdown is the unexpected event which is going to prove you right to people who just can't see it. I suppose the previous significant shutdowns could be seen in the same way but I suspect this time the bell will go off in peoples heads. The effect of ending the shutdown could be blunted if the Treasury decides not to refund its surplus.
We have to hand it to TBAC for acting responsibly in a system where everyone is out for themselves. It's almost shocking in this day and age that these people from the likes of C,JPM, GS and the like continue to advise policies which work against their institutions short term interests.
In the big scheme of things it doesn't take much to move stocks when you consider they can be lead higher by futures and derivatives. At least within an old range.
I noted that last Friday and this AM in China the SSE opened lower and then up it went. Nobody doubts the National Team calls the tune there and everyone loves it. China has been extremely patient as stock have sold off over the last year. As opposed to us where the whining never stops .
I also was bitching about how China is saying it will have $650bn in local government credit extended for infrastructure while we have none. That is wrong. Between Munis and what the Fed spends it may come close to that. The thing is they get a lot more bang for the buck with it.
There is still going to be that tricky period between economic slowdown and Central Bank printing. Who knows, maybe preemptive printing can save the day. Japan is on deck. ECB haven't heard a thing. Old fuddy duddy Powell, no way. Or is there?
It doesn't look ready to go up either. Of course your speaking in Hurst Cycle terms.
Cripes, the Mexican Peso is up 12 of the last 13 sessions. Even the Pound is rising and their entire economy and financial system is hanging on by a thread over a pit that nobody knows is how deep. This currency stuff is beyond this old brain to figure out in any relation to the stock market. Well we shouldn't try I suppose.
I had mentioned about a week ago that the Feds cash balance should start to balloon unless they hold off borrowing. Do not be surprised if the Treasury does not play catch up with a flood of borrowing after the shutdown ends and the checks start flowing again. I think it's about time that the Treasury will start giving the TBAC and its $500bn rainy day fund a FU.
There in nobody who is anybody in the world who wants 'tight' monetary policy. The politics of shrinking the balance sheet are impossible. Nobody wants it, well they wouldn't if they understood it. It has only gotten this far because of ignorance. Everyone thinks the Fed 'sets rates' with words. You can't blame the general public for believing it since the Fed fosters this idea too. If we exceed the Christmas lows I predict Powell will be getting an offer he can't refuse.
The BOJ may be about to start the flood again. Most did not see it but there was a flash melt up in the yen on the 3rd after a general melt up since mid December.
Then if these short Euro rates get near zero let's figure the ECB will pick up the ball again.
China intends to issue $630bn in local government bonds for infrastructure this year. Say what you will about China's vast credit expansion or if it can go on but it will go on, until it doesn't. Meanwhile is the US going to allow general deflation to take hold? I mean we don't build squat but at least we can inflate assets. It's all we have left. That's getting back to the offer Powell can't refuse.
I thought they were going to milk a low inflation number for some rally points. We will have to wait for the shutdown to end, over the weekend probably, and the always reliable, great China trade deal any moment.
This sort of thing always confuses me because for every seller there was a buyer. Net there is no new money. If dealers were doing a lot of the buying then functionally I suppose it's new money on the buy side.