Contractions In Money Flows And Market Liquidity
Summary
- A market inflection point was reached June 22. The subtleties of which may be under appreciated.
- Along with rising risk premia, multiple measures of money flow and market liquidity are in contraction.
- Required banking reserves are in a rapid and major yoy % delta contraction.
- The potential for a commodities "flash crash" in December, coupled with further economic downturn exist.
Over a month ago on June 21, 2015, Salmo Trutta hints at a market inflection point and a potential commodities flash crash:
Speculators and opportunists (short sellers) should see the upcoming seasonal sell-off in the stock market coming.... We're staring down another supposedly inexplicable "flash crash".
A date for the market inflection point:
7/22/15 is the next typical seasonal inflection date (where economic activity then begins to wane).
On July 1, 2015, ST hints at a Q4 recession:
The current #s indicate a 4th-qtr. recession. There will have to be govt. intervention to prevent it. And that won't happen.
And finally nails down a date range for the commodities flash crash:
Commodities could flash crash in Dec. Caveat emptor.
We generally take any such advisory with the requisite grain of salt and allow a + or - 2 day latency. Certain SA readers have chided the one who "would be our Fed chairman" about this market "call". We Nattered that... confronting an IP (inflection point) is one of the biggest challenges that all participants in today's marketplace might face. Recognizing change requires separating the wheat from the chaff and the majors from the minors.
Off the top, between July 20 and 24, the S&P 500 declined 55 points in 5 trading days, from 2132 to 2077. Just a few subtleties from the IP which came to pass... within the last week, many of the fifteen stocks which have been responsible for the bulk of last year's S&P 500 gains, missed, disappointed or issued lowered forward guidance, and were punished. Of the companies reporting, many tech, some large, (AAPL, auto companies, UTX, FCS, LLTC) and mostly those that were punished, in their reports... evidence of a widespread demand reset from China is mounting. We can't buy it and neither can they. Read into that subtlety the consequence that you wish.
Casting a shadow over this and any other subtleties, the underlying criteria pointing to Salmo's advisories... in terms of money flows, a massive contraction in "economic capacity" or potential would seem to be well underway. Coupled with what appear to be signs of nervousness, rising risk premia and eroding market liquidity, this could present issues in fall and winter. We endeavor to elucidate below.
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- A market inflection point was reached June 22. The subtleties of which may be under appreciated.
- Along with rising risk premia, multiple measures of money flow and market liquidity are in contraction.
- Required banking reserves are in a rapid and major yoy % delta contraction.
- The potential for a commodities "flash crash" in December, coupled with further economic downturn exist.
Speculators and opportunists (short sellers) should see the upcoming seasonal sell-off in the stock market coming.... We're staring down another supposedly inexplicable "flash crash".
7/22/15 is the next typical seasonal inflection date (where economic activity then begins to wane).
The current #s indicate a 4th-qtr. recession. There will have to be govt. intervention to prevent it. And that won't happen.
Commodities could flash crash in Dec. Caveat emptor.
There is no cost involved and it has been our experience that if you exert control (by unchecking a box of two) over your communications settings in your Seeking Alpha profile, your email inbox will not be polluted with one bit of Spam (not even the cured pork shoulder variety. Tasty even.)
As we are now a "contributor" at Seeking Alpha, our published articles, instablog and comments can be found here. Please continue to follow The Nattering Naybob here and at Seeking Alpha. We thank you for your support.
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