Liquidity 02 incl QE, Twist, LTRO, APP etc (Jun 14 - Dec 25)

[behappyalways]

Turbo Tightening
https://fedguy.com/turbo-tightening/

[winston]

Abby Joseph Cohen Says Era of Everything Going Up Is Over

by Elaine Chen and Tom Keene

(Bloomberg) -- With fervor in markets receding, investors will need to critically focus on fundamentals and security selection to ride out the turbulence, Abby Joseph Cohen said.

“For the last few years, the fundamentals have mattered less than things like momentum and investor enthusiasm,” she said.

“We’re now back into a period in which where it does matter, where it’s the fundamentals of earnings, the fundamentals of margins, the fundamentals of inflation and interest rates -- and putting that all together in terms of valuation models, that will make a big difference for investors going forward.”

“We see a move now I believe toward alpha, and that’s not just within the US equity market, that’s likely to happen in other developed markets as well, and also think of it more broadly in terms of asset categories that are no longer all going to be moving in lockstep,” she said.

As interest rates rise, both corporations and money managers will find it more difficult to use leverage to turbo-charge returns, so that means their underlying ability to perform well becomes more critical, Cohen said.

And in terms of how investors are looking at the economic backdrop, “what seems to be priced in right now is a mild recession, certainly not a severe recession,” she said.

Source: Bloomberg

https://finance.yahoo.com/news/abby-jos ... 15006.html

[behappyalways]

Treasuries' Worsening Liquidity Points To Broader Market Turmoil
https://www.zerohedge.com/markets/treas ... et-turmoil

[behappyalways]

A good watch...

Capital Wars, Liquidity & The Rise of China | Michael Howell
https://m.youtube.com/watch?v=xtz3AcaoBmg

[behappyalways]

A good watch


Liquidity Spiral In The Bond Market Is Causing "Tremendous Stress" | Jim Bianco
https://m.youtube.com/watch?v=7VEoAJ8BB00

[winston]

Central banks are now hoarding cash

Central banks are swapping their stockpiles of US Treasuries for cash - just in case they need to intervene in markets while China's foreign reserves fell to a five-and-a-half-year low last month.

Purged US$29 billion (HK$226.2 billion) in Treasury securities in the week ended October 5, bringing the four-week decline in holdings to US$81 billion.

Most extreme outflow since the beginning of the pandemic in March 2020, leaving total holdings at US$2.91 trillion.

Source: Bloomberg

https://www.thestandard.com.hk/section- ... rding-cash

[behappyalways]

South Korea expands corporate bond-buying program amid credit crunch concern
https://www.cnbc.com/2022/10/23/south-k ... ncern.html

[winston]

Looming S&P 500 Bear Case Sees 15% Drop on Fed Balance-Sheet Unwind

by Lu Wang

MS; The S&P 500 will drop as much as 15% by March, based on historic patterns and projected money flows in coming months.

To track broad money flows, the team include three major inputs:-
1. Changes in the Fed’s balance sheet;
2. The Treasury General Account (TGA), or Treasury cash held at the central bank; and 3. Reverse Repo Facilities (RRP), or cash parked at the Fed by money market funds and others.

With Fed QT running at a pace of $95 billion a month and the Treasury forecasting its cash balance to rise by $200 billion into year-end, that amounts to a squeezing of liquidity that alone implies an 8% drop for the S&P 500 by the end of December.

Source: Bloomberg

https://finance.yahoo.com/news/looming- ... 54394.html

[winston]

Global Liquidity is set to test US$174 trillion in 2023, after falling sharply in early 2022. China is already easing and the US Fed may be undertaking a 'stealth' QE.

Source: Smart Karma

[winston]

‘Silent killer’ liquidity crisis will stalk global financial system in 2023

Few people seem aware as a liquidity crisis offers few clearly visible symptoms until it begins to affect the internal organs of the financial system

It could be that the potential risks involved will not crystallise on a scale that threatens the financial system, but past crises offer little reassurance

by Anthony Rowley

One hidden threat is the vast amount of off-balance-sheet foreign exchange swap positions held by banks, which the Bank for International Settlements (BIS) said in December had reached more than US$80 trillion. This is a scary liability for 2023 as foreign exchange rates swing ominously.

Source: SCMP

https://www.scmp.com/comment/opinion/ar ... ystem-2023