Alright. So pretty much every market in the world right now is flashing major warning signs to our dear old belligerent stock market, but these signals have started to scream very recently. The Japanese are heavily reliant on dollar funding, and as a result we see how intrinsically connected the Yen is to the US indexes. When the two are moving together things tend to go well, but when they start to diverge, that's a major signal that liquidity issues are popping up behind the scenes. Retail is looking at a rapidly declining DXY and thinking "massive inflation is coming, pile into stocks" without realizing that it's basically reliant on the Euro and Yen, which are both now signaling a major deflationary movement for our good friend Dollar.
If you noticed, the bond market has been signalling the same thing for a while now, but today several European bonds broke out of their consolidation zone, which again shows that there are major liquidity issues ready to explode in the financial markets just like they did in March. It's a great thing that we have JPow to save us at the FOMC meeting tomorrow though, right?! Well considering that FOMC meetings were on Mar3, Mar15, Mar31, Apr28, and Jun9, it seems as though the financial markets really hate hearing his crap, so I doubt this time will be any different, especially considering the economic situation has pretty much confirmed to be at best an L instead of the V that he promised everyone.
Just a little point worth noting is that the initial major spike in GEX (60-day forward looking) started its ascent 60 days ago, so it'll be interesting to see how that plays out. Dealers are going to be selling tons of shares to delta-hedge as those call contracts expire and inside buying has fled the market already.
If you noticed, the bond market has been signalling the same thing for a while now, but today several European bonds broke out of their consolidation zone, which again shows that there are major liquidity issues ready to explode in the financial markets just like they did in March. It's a great thing that we have JPow to save us at the FOMC meeting tomorrow though, right?! Well considering that FOMC meetings were on Mar3, Mar15, Mar31, Apr28, and Jun9, it seems as though the financial markets really hate hearing his crap, so I doubt this time will be any different, especially considering the economic situation has pretty much confirmed to be at best an L instead of the V that he promised everyone.
Just a little point worth noting is that the initial major spike in GEX (60-day forward looking) started its ascent 60 days ago, so it'll be interesting to see how that plays out. Dealers are going to be selling tons of shares to delta-hedge as those call contracts expire and inside buying has fled the market already.
註釋
The Fed keeping swap lines open until March is them admitting that there's not only a dollar shortage, but one that isn't ending soon
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