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Worst Liquidity Conditions Since 2008 Coming to a Market Near You

The Treasury issued $152 billion of net new supply in November. Surprisingly that did not cause a drop in stock and bond prices. Instead, dealers and speculators increased their short term borrowing that normally finances bond purchases, and instead shifted the cash to stocks. This is borrowing from the future for speculative profit today. These things typically don’t end well.

It will get worse in January. Here’s how we know.

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