Buy and Sell Signals, and Other Market Perspectives Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives

SPY 652.53

-1.5%

Nov 20 4:00 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: GROUND ZERO™ who wrote (62665)	8/1/2014 9:25:21 AM
From: FCom777	Read Replies (2) of 219122

A liquidity event is a black swan event that disrupts the risk profile of financial entities that causes a stampede to sell assets and raise cash. The last big one was the 2008/2009 debacle when Lehman and AIG went belly-up. That disruption was huge and lasted months. All of a sudden, carefully balanced risk profiles became much riskier since a large number counter-party obligations that had been relied upon simply vanished. Everybody raising cash at the same time causes liquidity to be drained from the system causing just about everything to go down - and fast. The Fed steps in and buys notes (mostly shorter term) to pump liquidity into the system. That's what's happening right now. Earlier this morning short term notes became much stronger on a relative basis to longer term which also coincided with the big bounce up for equities this morning. My guess is the Argentina default caused a mini-event which will likely be easily handled by the Fed. Is it a 'one and gone' or the 'tip of an iceberg' that sets off the dominos? That's the question to answer. You will know that the event is history when the bond/equity relationship returns to normal.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next