As the market stages a spirited rally off a test of the lows and the 200 day moving average, it’s important to keep one thing in mind. Liquidity factors are not going in the right direction and won’t be for a long time. Consequently, I see every rally as a gift, an opportunity to sell before the real ugliness gets under way later this year.
The most important driver of liquidity, after the Fed, is the US Treasury, and it is not a positive. It is sucking hundreds of billions of dollars out of the worldwide liquidity pool that fuels financial asset purchases.
Four factors have exacerbated that problem. They all require the Treasury to borrow more money, issuing more and more debt for investors to absorb without the help of the Fed replenishing the cash pool as it did every month under QE. In effect, the Treasury is crowding out the stock market.
Here’s what’s happening to all that money – and what you can do to profit as it disappears…
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The post Three Short Recommendations, As The Treasury Sucks Up Money was originally published at The Wall Street Examiner. Follow the money!