And I’ve spewed a whole lot of words over the past 3 weeks. Scary words. Words including warnings that one of the titans of the…
There’s so much confusion out there about how money gets from the Fed into the stock and bond markets. I see the comments in my Twitter feed. People are clueless. Like how M1 is causal. Or how the Fed pumps money into the banking system and that doubles back somehow to speculative bubbles.
The Primary Dealers always hedge their fixed income portfolio positions in the futures markets. Looking only at their bond portfolio positions may not give us an accurate picture of how screwed they are, or are not.
Back in 2008-2009, I chronicled how the Primary Dealers caused the stock market crash. They were the most important and least recognized cause of what the media has labeled the Great Financial Crisis.
The dealers were overleveraged and positioned wrong then. They are overleveraged and positioned wrong today.
Withholding tax collections have exploded upward over the past month through February 3. Other date confirm the strengthening. Here’s what this means for portfolio strategy and trading tactics.
In the mid month QE update, I concluded the intro summary with this warning:
1/16/21 At this point, it seems like we are on the edge of the precipice. The risks are enormous. At the very least, I don’t see the likelihood of significant upside for either stocks or bonds.
Likewise, this could very easily go south in a big way. The Fed would need to act. Would it be too late? Would the market even respond?
Stock market analysis requires many disciplines. Unlike, physics, for example, it’s not rocket science. Hell, it’s not even science. But while physicists and astrophysicists understand more and more about how the universe works, there is much more that they don’t understand. For every theory that they confirm, more questions arise.
They say that approximately 80% of the mass of the universe is “dark matter.” They don’t know what it is. And there’s “dark energy,” that they don’t understand either. They see their effect, but they can’t see the cause, and don’t know what either of them is. So they observe and measure the effects, and make predictions and develop theories based on that.
.
Macro Liquidity continues to bulge. The stock market has followed. It became oversold versus the surge in liquidity that the Fed initiated in March 2020. And it hasn’t looked back since. Should we expect to see stock prices become overbought again before the next big crash?
Both bonds and stocks have weakened over the past 2 weeks. It’s a sign that the Fed isn’t supplying enough QE. We’ve known for a…
The risks are astronomical despite improved tax collections. Subscribers, click here to download the report. Available at this link for legacy Treasury subscribers. KNOW WHAT’S…
