Serious illiquidity issues were unfolding a small number of trading sessions ago, as equities and fixed-income outflows – along with derivatives-related and speculative selling – began to overwhelm the marketplace. Fed assurances reversed trading dynamics. De-risking/deleveraging has, for now, given way to “risk on.” A powerful confluence of short covering and risk embracement (and leveraging) has acutely speculative markets once again perceiving liquidity abundance and unwavering central bank support.
TSP & Vanguard Smart Investor Posts
Thank you for staying with the ship while it is taking on water and the storm is approaching. Sure it is still floating after the last storm, but it has taken on a lot of water since then. Not everyone can get in the life rafts. Thank you for waiting.
Crisis Dynamics tend to be a process. There’s the manic phase followed by some type of shock. There’s at least a partial recovery and a return of optimism – bolstered by dovish central bankers. It’s the second major leg down when things turn more serious – for sentiment, for market dynamics and illiquidity. Disappointment turns to disenchantment and, eventually, revulsion. It’s been a long time since market participants were tested by a prolonged, grinding bear market.
Two fish were swimming past houses and cars and the first fish said, “this certainly is a large tsunami” and the second fish said “what’s a tsunami” and the first fish said “a tsunami is a large wall of water that pushes inland” and the second fish said “what’s water”.
In Goldman Sach’s Whitehouse Update I: Pre-Stock Market Crash Treasury Secretary “Moe” Mnuchin threatened that the stock market would crash if his tax cuts for the Super Rich did not get passed. Shockingly, the Republican’s passed the tax cuts. Okay,… Read More ›