Fed Liquidity Pump-- the fix is in-- Oh no? Oh no! Oh YEAA!
Recently, experienced financial analyst/economist Michael Howell (see footnote 1) has made the case that central bank liquidity (and to a lesser degree, private sector liquidity) is what drives risk-on markets (
QQQ
,
BTCUSD
).
While Dr. Howell uses his own deep analysis to predict that liquidity is now in an uptrend (see any of his numerous video interviews over the past 3 months on youtube), we point out that Elliot Waves have successfully predicted past liquidity changes (2012-2019), and that we now have a new Elliot Wave set up targeting a 35% rise in liquidity over the coming 24 months!
Based on a reading of Dr. Howell's material, we can approximate Fed-sourced liquidity roughly by using a formula that makes use of the following weekly data-points:
"But but... the recession!"
"But but... earnings!"
"But but... CPI still over 2%"
Will risk-on markets follow liquidity, or will they follow the main street economy? Dr. Howell and Elliot Waves point to the former!
footnote 1:
QQQ
,
BTCUSD
). While Dr. Howell uses his own deep analysis to predict that liquidity is now in an uptrend (see any of his numerous video interviews over the past 3 months on youtube), we point out that Elliot Waves have successfully predicted past liquidity changes (2012-2019), and that we now have a new Elliot Wave set up targeting a 35% rise in liquidity over the coming 24 months!
Based on a reading of Dr. Howell's material, we can approximate Fed-sourced liquidity roughly by using a formula that makes use of the following weekly data-points:
-
WALCL
(Federal Reserve Balance Sheet)
-
WDTGAL
(US Treasury General Account)
-
RRPONTSYD
("Reverse Repo" facility)
"But but... the recession!"
"But but... earnings!"
"But but... CPI still over 2%"
Will risk-on markets follow liquidity, or will they follow the main street economy? Dr. Howell and Elliot Waves point to the former!
footnote 1:
Founded CrossBorder Capital in 1996. Michael developed the quantitative liquidity research methodology while he was Research Director at Salomon Bros. from 1986. He was subsequently appointed Head of Research at Baring Securities in 1992, and was top-ranked “Emerging Market Strategist” by institutional investors for the three years prior to setting up CrossBorder Capital. Michael has worked in financial markets since 1981 and is a regular international conference speaker. He is a qualified US Supervisory Analyst and has a Doctorate in Economics.(from crossbordercapital.com)