Liquidity Update

Heading into a crash?

From Tuomas Malinen’s Forecasting Newsletter.

Issues discussed:

• China continues to dominate global liquidity flows.

• Markets slavishly follow the liquidity injections/draining with a varying lag.

• The likelihood of a negative October-surprise in the markets keeps on growing.

While we wait, whether the world steps deeper into escalation or not, I decided to update you on the global market liquidity situation. The cyclicality of liquidity flows, which I documented a year and a half ago, has continued till to date dictating the direction of the markets.

In this post, I present the recent trends in liquidity flows. Markets, unsurprisingly, continue to follow them, slavishly, which currently implies rough times ahead.

Trends in global market liquidity