3 Potential Liquidity Supports To Keep Bull Market Alive | Seeking Alpha
Chris Puplava has written an excellent article about how the bull market could keep going. He talked about different spigots of liquidity such as the Federal Reserve, bank credit, and margin credit. When the Federal Reserve closes its spigot soon, other sources of liquidity could stay open.
Another concept Chris discussed is how sector rotation keeps bull markets alive. Even after the stock market peak in 2007, the materials and energy sectors were able to keep part of the stock market alive for the first half of 2008. The energy sector is known for bullish trends from January to June in particular. When sector rotations turn into bonds and cash, that is the time to worry.
Currently, commercial bank credit is increasing while the Federal Reserve stimulus is being withdrawn. So, the stock market can keep going up. There is no problem with the economy. The Yen carry trade may also soon provide more liquidity since the Bank of Japan may soon devalue the Yen in order to contain its debt load over the next two years.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment