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World Stock Markets Trading Discussion - Jeopardized jollity

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11 minutes ago, BurntOnce said:

so piling into bonds is a bad idea because of default risk, sudden plummet?

 There's no default risk. 

It's a bad idea because the liquidity isn't there to support a bullish trend. It will reverse with a V bottom. If it doesn't, it won't take long for the SPX to get to 2500.    

There's a reason the Fed ended QT early. There's a massive liquidity shortage.  The Treasury just took 35 billion out of the market yesterday, and that was even before the official lifting of the debt limit. That's just a down payment on the massive borrowing that  lies ahead. 

I have been  reporting in Liquidity Trader for months that the rallies in stocks and bonds were driven by a massive increase in  margin and repo borrowing, and that when the debt ceiling was lifted, there would be hell to pay.  I've been unequivocal about that. The data was glaring.  

My most recent warning was just last week

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6 minutes ago, DrStool said:

I don't  want to smile too soon, but I sense vindication for my analysis and conviction that it would ultimately prove correct. I mean, you can blame Trump's trade war but that was not  a change of direction. It's following a predictable path.

No, this is about the liquidity, and especially the fact that they're panicking into bonds concurrently with panicking out of stocks. They'll live to rue the day they did that. And it won't take long.    

Market down about 100 off yesterday's intraday highs on ES, and almost 50 off this morning's odd spike to 2960. Even if we bounce a bit from at or near here, I would say you have earned the right to smile a bit. 👍

 

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1 hour ago, DrStool said:

I don't  want to smile too soon, but I sense vindication for my analysis and conviction that it would ultimately prove correct. I mean, you can blame Trump's trade war but that was not  a change of direction. It's following a predictable path.

No, this is about the liquidity, and especially the fact that they're panicking into bonds concurrently with panicking out of stocks. They'll live to rue the day they did that. And it won't take long.    

Let's not forget that QE is on the way. When and where first is the only question.  I figure Japan will go first then the EU.  Of course the big dog is the Fed.   I say December at the latest.  Then we will see if they can engineer more rounds of 

A. Growth above at least stall speed

B.  Markets which are at least fully liquid to start and no disasters in the credit and stock markets.

I've always thought a couple of more rounds of QE at ever higher amounts will keep the system intact for several years to come. Maybe yes maybe no.  

Trump will surely waver on the  new tariffs which will cause a stupendous rally.  I can barely imagine how big a spike we will have when the new QE announcements kick in.

 

All this talk about rates is stupid.  It's about liquidity of course.  I remain shocked nobody in the mainstream even brings the topic up.  A bunch of freaking pansy's. You would think one person would ask Powell when and how much QE is anticipated for the next round.  Of course there are plans.  All these stupid narratives about "rates" is sickening.

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Now that I've beat my chest, I feel a smackdown coming on. 

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Perfect double bottom. Here come the bots. 

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Thanks for the reminder Doc. I've been lightening up on exposure to equities the last couple of months. The U.S. Treasury will be draining a lot of liquidity from the market the next couple of months as they issue excess paper. Your were the first to pin-point this. This won't be positive for financial assets. Trade safe.

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