This from Capitalstool.
11 hours ago, PullMyFinger said:Lee,
I start my question with a confession. I am both a Technical Trader and Liquidity Trader subscriber. I read TT voraciously the minute I become aware it is out. With LT, I am not as faithful of a reader–I think it is a great product and someday hope to understand it better, but for now I sometimes struggle to intuit the stuff.
Because I don’t read LT as closely as I should, I don’t know how or how much you track international capital flows. Maybe it’s in there plain to see and I don’t get it.
But here is my question: is it possible that this rally has been fueled in significant part by international capital flows into the U.S. stock market? Could it be “smart” money getting out of Europe ahead of civil unrest and war that is likely to spread further as early as next year? And also capital moving out of China given the bank and real estate debacles that are happening?
Dear PMF-
First of all, thanks for being a loyal subscriber. You and your fellow subscribers are the reason I do this. Without you, there would be no Liquidity Trader, Wall Street Examiner, or even, yes, The Stool Itself.
Thanks also for your great question.
Yes, it’s possible, and yes I track the inflows of foreign capital, but only indirectly and not to the parsed detailed extent that I did some years ago. In terms of the US market, it is a waste of time to break out where the money might be coming from. Its influence is marginal relative to the Fed and domestic money.
But the impact of foreign inflows, which are almost entirely European, is reflected in total deposits, in the FCB data, and ultimately, in the Composite Liquidity Index. The last time I looked at that US stocks were the most Dover Sole they’ve ever been, and I reached a bullish conclusion. Maybe not bullish enough, but bullish, nevertheless.
Stocks Are Even More “Dover Sole” Versus Liquidity
LEE ADLEROther liquidity measures were also bullish in July.
As Good As it Gets, Before the End of Time
They are far less so now. And the fact that we are all questioning suggests to me that the end could be nigh. I’ll be working on an update later this week.
And I’ll post our usual intraday look here a little later this morning. This week’s Technical Trader is in the hopper and will be published before 5 AM ET.
