Another thought on liquidity. . .
Perhaps the FED is not only concerned with their soft-landing of the economy, which already has had its first bump. . . but is likewise working a sort of soft-landing of the equity markets. . . or at least keeping them from running away again.
The tech mania was seen by nearly all economists as a negative . . . I am wondering if this turn toward draining of liquidity coincided with the bounce we experienced in January's markets.
They see the markets heating up, they begin to drain liquidity once again. . .. . markets dump, they pump more liquidity. . . back and forth. . . literally like soft-landing an airplane.. . . .line up with runway, gear down, trim, power, flaps down for an attitude of landing . . . . nose comes down too much. . . pull up a bit, altitude dropping too quickly, add a touch of power, too much . . .the plane wants to fly. . . . steady as she goes, not too high, not too fast, keep nose up. . . stall warning. . .hold and land. . . .full flaps or reverse thrust. . .taxiway to terminal . . .pick up your paycheck.
So we may be in a phase of the economy, where the FED feels the need to make shorter term changes to soft-land and avoid as much recession as possible. .similar to the string of quarter-point moves last year . . . . but it appears that . . .
The FED is dead-set against allowing the plane to fly. . . so each time the markets heat back up again, they pull back on the liquidity.
And that may have more to do with WHY the markets won't stage an extended recovery, than earnings, the economy, the interest rates, the media, the bears or anything else that the bulls might wish to place blame.
I don't know if this analogy helps any others here. . .but it helps me not to flinch as much.
Rande Is
PS> No, I am not a pilot. But my dad taught a thousand pilots. |
