Stock Market Withdrawal Symptoms
Start to kick-in and in the need of immediate help
Easy liquidity has benefited a variety of asset classes, including equities. And it become deep rooting addiction as the injection dose is at all time high, which make the asset classes fly hi to the moon. What happen when the dose of injection is decreased? Well as a former junkie.. ups forget that and stop here.. The stock market is literally depend and enjoy this liquidity injection drugs.
Now is the testing time for the companies to really depend on real economy, all the injection need to start churning profits. Since U.S. hit the 40 years all time high on inflation, which is the impact of expansion policies, there’s no other way for the Fed to not shift into tightening mode. Which Powell has said it on testimony, although he was kind of dovish too at the end of it.
We see bloodbath all over the place as the falling knife still show no sign of stop yet today in stocks market. As expected this is the natural reaction of market into the first hike. US dollar rose along with yields, and stock market going drop.
Easy liquidity has benefited a variety of asset classes, including equities. And it become deep rooting addiction. If the the drug is decreased aggressively on dose, this could be fatal. But keep feeding the addiction will bring more catastrophic. This is exactly what’s the Fed need to do. To get it done correctly.
On the other side, this risk-off narrative has been pump by mainstream media, by alarming the ‘Hawks-On” especially in the name of big investment bank. You might want to check and do some research on how strong this call has been on the past two week.
This kind of headlines is what we found since last week:
- Goldman predicts the Fed will hike rates four times this year, more than previously expected
- JPMORGAN CEO: COULD BE SIX OR SEVEN RATE HIKES THIS YEAR
- Traders Follow Goldman Call as Cash Piles Into March Rate Hike
The question here is:
- Is it will benefiting the big boys, as they know more hawkish stance is inevitable, and they all already out of long position?
- Or this narrative is more about dumping before pump it as the possibility of Fed flip and become more dovish to safe the stock from keep plummeting?
The current level of indexes is on the critical one for Fed to decide, some jokes saying that stock market need emergency rate cut.
More about market: Trading Cocktail
