What Did You Buy Today?

[Otter]

(02-10-2021, 11:37 PM)vbin Wrote:

(02-10-2021, 04:39 PM)Otter Wrote:

(02-10-2021, 11:29 AM)vbin Wrote: QE has been restricted. Central bank not printing. They officially are saying, too much liquidity and reserves in banks. They plan to change policies post March 31st( or was it april, I forgot) and hence we will see banks start to buy more securities(bonds).

That is not the case. Fed tapering of bond purchases isn't expected to start occurring until 2022. Rate rises aren't likely until the end of 2022/early 2023

https://www.bloomberg.com/news/articles/...qe-mistake

https://www.nytimes.com/2021/01/14/busin...rates.html

The economy and labor markets would have to perform far better than the best consensus estimates for that to change.

https://youtu.be/7tpmPiRFe2Q you can read the report from treasure board advisory committee.

But then listen to this
https://youtu.be/FZRaLvaYgpA I hope I shared the correct one, saw this guy shared some data In one of his vedios. Feb in general have been the volatile month + market situation, I am being cautious.

I watched the Steven Van Metre video. My main takeaway was that, even with the SLR extension expiry on March 31, 2021 (assuming no further interim rule extension by the banking regulators), bond yields at all ends of the curve will continue downwards, due to increased demand. That would be a replay of what happened after 2008. TINA, so buy stonks. The temporary SLR extension was an interim rule adopted on an emergency basis last year to avoid a banking crisis on top of the pandemic shutdowns. Similar moves can be made again on an expedited basis to keep the plumbing of the banking system unclogged. The folks running these agencies have shown a lot of competence over the past 10+ years at avoiding any semblance of a liquidity crisis. 


Those charts he posted from the Treasury presentation show that the government expects 0 appreciable inflation in the next couple years. Even with these huge money dumps, which doubled the Fed balance sheet in under a year, we are barely treading water. The government is terrified of a deflationary cycle, and will do anything right now ($1.9 Trillion stimulus for the demand side, unprecedented QE so far) to stave off a 1930s repeat. It is somewhat of a repeat of post-2008. Then, although there was a lot of talk about expected inflation, it didn't really pan out in the way economists expected (mostly looking at it through a 1970s/1980s lens). Certain categories of assets (equities, property, bond prices) did get wildly inflated when compared to traditional growth metrics like GDP growth. The dollar slid hugely against other currencies through 2011, as we printed more than the ECB at first. When the EU almost destroyed itself (initially with Grexit, and Italy/Spain/Portugal on the brink of fiscal crisis), the Germans backed down from their push for austerity, and the ECB started to print as well. 

The stuff that has inflated the most over the past decade is goods/services/property aimed at high earners (where the inflation has occurred). As wealth inequality continues to accelerate and create a two-tiered economic system, there is a floor to how much necessities (food/electricity/etc) can inflate without appreciable wage growth at the bottom of the economy, without risking massive societal destabilization (political extremism, unrest). Even allowing such an inequitable system to exist may prove to be unsustainably unstable. If a large section of the economy can't afford basic necessities on prevailing wages, bad things tend to happen to those societies. That is a very long post for another time or forum. 

tl;dr Stonks go up.