I developed a Composite Macro Liquidity Indicator some years ago as a way of combining various measures of bank deposits, bank investments and trading activity, foreign central banks and Fed liquidity provision. For the past 8 years, the performance of the US stock market has closely tracked this indicator of composite liquidity. Today there are signs that the market has become overly euphoric. Although I can't say specifically from this data when that euphoria will end, it seems highly likely that it will in the not too distant future. The end of these periods of unusual euphoria are never pretty
Stock Market vs. Liquidity Shows A Weird, Extreme Euphoria
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David Stockman’s Contra Corner isn’t your typical financial tipsheet. Instead it’s an ongoing dialogue about what’s really happening in the markets… the economy… and governments… so you can understand the world around you and make better decisions for yourself.
David believes the world -- certainly the United States -- is at a great inflection point in human history. The massive credit inflation of the last three decades has reached its apogee and is now going to splatter spectacularly.
This will have lasting ramifications on how governments tax and regulate you… the type of work you and your family members will have available and what you get paid… the value of your nest egg… and all other areas comprising your quality of life.