Headline: An Obsessive Investor Focus…Naturally.
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The Short Answer To The Title’s Question =
When EXPECTATIONS For U.S. Interest Rate Increases + Federal Reserve Balance Sheet “Run-Off” PEAK.
Because Higher Rates + Balance Sheet “Run-Off” = Reduced Financial Market Liquidity.
And Reduced Financial Market Liquidity = Universally Lower Financial Asset Prices [Equities + Fixed Income + Real Estate].
Q1 2022 hedge fund letters, conferences and more
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The Monthly Price Chart Of The S&P 500 [see above]…Especially Since The Spring Of 2009….Steeply Ramped…
Without Much Of A Meaningful Capital Draw-Down…As The Fed Frequently + Quickly Modulated The Quantitative Easing Dials…Whenever It Deemed Necessary…To Stimulate U.S. Economic Activity.
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But Then…Without A Doubt + Collectively
…U.S. Domiciled Publicly Traded Corporations Are The Most:
- Dominant +
2. Innovative +
3. Profitable Companies
…In The World.
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But Do Not Confer A Company’s Equity Performance Strictly To Operational Acumen…As A Much More Explosive Element…To Share Price = Market Liquidity.
Because Since The Spring Of 2009…The Liquidity Hose Of The Federal Reserve Has…For The Most Part…Run At Close To 100% Capacity…
Toggling Between Flow And/Or Stock Of Printed Dollars…Without Much Of An Abolute Liquidity Draw-Down…
Versus The Current Federal Reserve Plan To Shrink The Balance Sheet At $95B/Month…Which Is Much More Dramatic Than The 2015-2019 Episode [see chart below].
Further Complicating Matters…A Challenging Inflationary Backdrop + Slowing U.S. Economy.
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For Now…The Flow Capacity Of The Federal Reserve’s Balance Sheet Has Quickly Reverted To Zero…And The Balance Sheet’s Stock Has Most Definitely Crested …Soon Becoming Negative.
Equity + Fixed Income Investors/Traders…Cower + Flee In Anticipation…As The Cliched “Wall Of Worry” Has Rarely Been More Fortified.
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Article by Global Slant
