Ultimately, all financial roads lead to Wall Street. The big investment banks and trading firms known as Primary Dealers all play in one worldwide money pool. When the ECB prints money, it’s not just available to Europe, it is also instantly available to Wall Street.
Growing European bank deposits have always strongly correlated with US Treasury note prices. However, that correlation has broken since mid 2016. Instead, European bank deposits have correlated strongly with US stock prices. That suggests that capital flows from Europe have been a key support to the US stock market rally.
European deposits have grown as the ECB has pumped trillions of Euros into their banking system. Deposit growth has not kept pace with the growth of the ECB’s balance sheet. This also suggests that money has been leaving the Continent and heading to Wall Street.
But that could all be about to change…
The post The Tiny Little Straw That Could Break The Stock Market’s Back This Month appeared first on Lee Adler’s Sure Money.
The post The Tiny Little Straw That Could Break The Stock Market’s Back This Month was originally published at The Wall Street Examiner. Follow the money!