May I interject here ?
Just a thought... [for the weekend, as I am leaving....]
-- interest rates and liquidity -- can be understood as the OXYGEN that is required for combustion. What may appear to you to be a 'small' change in interest rates is decisive in determining the dynamics of the burning process. Kindling needs lots and lots of oxygen. Since last October the fire has been 'supercharged' with forced induction of oxygen. The end of supercharging cools the fire. The actual cutting off of oxygen would put the fire out entirely. This is why the 'oxygen' trend is so important. Finally, there is the supply of wood itself -- the size of the growth opportunity -- at this point there is more wood in Asia.
I would switch things a bit, and say, oxygen is liquidity, and kindling is interest rates.....as kindling is ignited, it sucks oxygen faster...[from other sectors ?, from the bond market ? or from new sources? <retirement $$$>] respectively choking some of the other sources... or ?
The supply of oxygen could be hard to measure.... in an open fire [global market], hence, when it appears that such supply is about to run out... suddenly, more of it comes "on line", re-igniting the...still red [or white] hot embers. [which seemed to be dying, as rates are hiked], and so, giving new life to the fire. [and making the new higher rates relatively less important, including the higher trending point, so long so, the potential limit of said trend is "in sight", and the heat generated from the fire <return> can be superior to the effects of the upper trend of rates].
Finally, the quality of wood is important, not only its supply; yes there may be more wood in Asia, however, is the quality as good over there, as it is in the US ? -- looking at long term, the fire will burn longer, and steadier with say, harder wood...
I guess speculative heat could be more attractive with a fast burning wood producing higher heat, in a flash.... unless the wood is wet or rotted....
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Well.. enough of Paul Bunyan stories.... time for wine and fish. |
