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wutangfinancial
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Dallas, TX
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re: Discussion of Fed Liquidity’s Impact on Equity Markets
I can't wait until you get blown the frick out.

Go back to the Tesla thread, this discussion is for the adult swim crowd.
This post was edited on 7/6 at 11:22 am


RedStickBR
LSU Fan
Member since Sep 2009
14009 posts

re: Discussion of Fed Liquidity’s Impact on Equity Markets
Thanks. I'll check it out.

We should just make this thread a repository of liquidity/flow info


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Mr Perfect
Lamar Fan
Member since Mar 2010
17836 posts

re: Discussion of Fed Liquidity’s Impact on Equity Markets
no chance. stop losses very tight.. like I said none of y'all post gains . just a bunch of loud mouths investing in Disney and Ford


wutangfinancial
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Dallas, TX
Member since Sep 2015
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re: Discussion of Fed Liquidity’s Impact on Equity Markets
This is a macro thread. Nobody cares about you getting fake rich clicking buttons. You seem to know nothing and your ignorance is a blessing but it won't last.


RedStickBR
LSU Fan
Member since Sep 2009
14009 posts

re: Discussion of Fed Liquidity’s Impact on Equity Markets
What has happened to the thread? This is supposed to be where the white shoe folks gather


Mr Perfect
Lamar Fan
Member since Mar 2010
17836 posts

re: Discussion of Fed Liquidity’s Impact on Equity Markets
I've posted very good links for us my friend. very good ones about the Fed reserve and spending.


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wutangfinancial
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Member since Sep 2015
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re: Discussion of Fed Liquidity’s Impact on Equity Markets
U.S Stock Funds Rose 23.5%

quote:

Right now might be a rare case. Because even though the average U.S.-stock fund rallied by that much in the second quarter, according to Refinitiv Lipper data, it was only a partial rebound from the horrendous first quarter. In that first quarter, as the coronavirus lockdowns weighed on the economy and the stock market, the average fund was down 24.6%.


quote:

The winners in the market, he notes, have been growth stocks (companies that promise profit growth), which have drubbed value stocks, as well as technology as a sector. Large-cap growth funds were up 27.8% in the quarter; science and technology funds were up 33.1%.

International-stock funds rose 18.1% in the quarter, to shave their year-to-date decline to 9.2%. Mr. Benkendorf says emerging markets might be one area that is “still a bit of free lunch” for investors, with its reasonable valuations.


Edit: $1.2T in helicopter money incoming from Congress. More juice for the consumer. Should help prevent deflation.

quote:

The financial burdens from mortgages and consumer debt vary quite a bit. Let’s consider two reasons for this: The larger the debt, the larger the burden, as households need to pay more interest on a larger principal. And changes in interest rates obviously influence how much is paid to service loans. The blue line (mortgage debt plus consumer debt) increased from the early 1990s until the past recession, when it decreased. This decrease is the result of the combination of the two effects noted above: the amount of debt and interest rates. With one exception (in the fourth quarter of 2012), total debt obligations are at the lowest they’ve been since these data were first collected. And this is especially true of mortgage debt.


Found it interesting that we actually could be setting up for an inflationary boom once the shutdowns end. Households are in the best fiscal shape in decades. More disposal income. I would have never guessed that.

FRED
This post was edited on 7/6 at 2:01 pm


RedStickBR
LSU Fan
Member since Sep 2009
14009 posts

re: Discussion of Fed Liquidity’s Impact on Equity Markets
I'd bet a big reason those debt service obligations look so low is because interest rates are at artificially low levels (recall the 10-year is currently enjoying the lowest rate ever).

Consider the blue line in the chart you posted:

1. Household debt service = 10% of disposable personal income

2. Let's assume annual disposable personal income of $100,000. This equates to annual household debt service of $10,000.

3. $10,000 in debt service is the equivalent of having a newly-inked 30-year mortgage for $185,579 at 3.50%.

4. If you're a believer that interest rates are too damn low (like I am; like Druck is; like the majority of money managers probably are), then you can see how quickly what looks attractive on your chart begins looking unattractive under normal conditions.

5. Let's assume the 10-year gets back up to 3.00% from the current ~0.70%, just for shits and giggles.

6. Let's assume interest rates on 30-year mortgages also increase by 230bps to 5.80%.

7. Your annual debt service is now $13,067 which, at 13% of household disposable income, would bring your blue line to about the highest level since 1980.

----------

As somewhat of an aside, go here and read pp. 308-310. This sounded so familiar when I read it it sent a shiver up my spine:

LINK


wutangfinancial
LSU Fan
Dallas, TX
Member since Sep 2015
4853 posts
 Online 

re: Discussion of Fed Liquidity’s Impact on Equity Markets
Did you listen to Mike Green explain that if a fraction is passive investors start selling there would be too much selling pressure to handle a full liquidation because of all the positive feedback loops passive investing has created? The Nazis had similar craziness in the 30s because the culture was so infatuated with the stock market going up. They apparently had a 67% drawdown in equities because of the easing they did. It's becoming scary.
This post was edited on 7/6 at 9:31 pm


RedStickBR
LSU Fan
Member since Sep 2009
14009 posts

re: Discussion of Fed Liquidity’s Impact on Equity Markets
Haven’t listened to it yet. It’s #1 on my list the next time I drive for long enough to get a podcast in. I don’t view record high numbers of retail brokerage accounts as a good thing. If there’s a buyer and seller for every transaction, and if the retail component of buyers is as high as it’s been in years, you gotta wonder who’s selling and why they’re doing it.

There are a lot of funny quotes in that book from the late 1920s by Wall Street types disgusted that their shoe shine boys, housekeepers and cooks were providing them stock tips.


cgrand
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re: Discussion of Fed Liquidity’s Impact on Equity Markets
quote:

The Fed has "no limit" to the amount of bonds it can purchase and has the bandwidth to ease policy further with forward guidance in keeping lending backstops in place as needed, Federal Reserve Vice Chairman Richard Clarida said in an interview on CNN International. While the economic rebound in May and June was "very welcome," the Fed is following the virus very closely to monitor its impact on the economy. "We have a lot of accommodation in place; there's more that we can do... there's more we will do," he said.


RedStickBR
LSU Fan
Member since Sep 2009
14009 posts

re: Discussion of Fed Liquidity’s Impact on Equity Markets
Yup. Those are some strong words.


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RedStickBR
LSU Fan
Member since Sep 2009
14009 posts

re: Discussion of Fed Liquidity’s Impact on Equity Markets
I failed to mention that the Fed's balance sheet declined slightly again last week. We'll see what happens this week. Top chart is total assets. Bottom chart is weekly change in total assets.

Image: https://fred.stlouisfed.org/graph/fredgraph.png?g=sJWX


Image: https://fred.stlouisfed.org/graph/fredgraph.png?g=sJWQ


RedStickBR
LSU Fan
Member since Sep 2009
14009 posts

re: Discussion of Fed Liquidity’s Impact on Equity Markets
Fed's balance sheet declined by another $88B this week. Total assets are now only $6.9T. See Table 5:

LINK
This post was edited on 7/9 at 3:48 pm


wutangfinancial
LSU Fan
Dallas, TX
Member since Sep 2015
4853 posts
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re: Discussion of Fed Liquidity’s Impact on Equity Markets
It will be interesting when earnings start rolling through and 2021 becomes the focus again. Fiscal stimulus should be another boost for stocks.


Mr Perfect
Lamar Fan
Member since Mar 2010
17836 posts

re: Discussion of Fed Liquidity’s Impact on Equity Markets
sure will dude. let's hope Mitch tells jpow to print $$


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RedStickBR
LSU Fan
Member since Sep 2009
14009 posts

re: Discussion of Fed Liquidity’s Impact on Equity Markets
Good read on this week’s Fed Balance Sheet activity:

LINK /


RedStickBR
LSU Fan
Member since Sep 2009
14009 posts

re: Discussion of Fed Liquidity’s Impact on Equity Markets
Increase this week of $38B:

LINK /


Mr Perfect
Lamar Fan
Member since Mar 2010
17836 posts

re: Discussion of Fed Liquidity’s Impact on Equity Markets
yup all you gotta know is jpow print $$ schedule and slap the ask

very great week for me. very good stuff. gl to all traders
This post was edited on 7/16 at 5:45 pm


iAmBatman
USA Fan
The Batcave
Member since Mar 2011
10560 posts

re: Discussion of Fed Liquidity’s Impact on Equity Markets
quote:

yup all you gotta know is jpow print $$ schedule and slap the ask

very great week for me. very good stuff. gl to all traders


wtf does this even mean?


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