🚨 "Stimulating into a bubble" by Ray Dalio - here are the key takeaways 👇
The Federal Reserve announced it will end Quantitative Tightening (QT) and begin Quantitative Easing (QE) again — calling it a “technical adjustment.” But let’s be honest: That’s easing. And easing into this environment is something we’ve rarely seen in history. Let’s unpack what this means 👇 📉 Normally, QE happens during crisis. Low valuations, weak growth, wide credit spreads, and falling inflation. QE was meant to stimulate into a depression. 📈 This time is different. Stocks are near record highs AI and tech valuations are in bubble territory Unemployment is near record lows Inflation is still above target Credit and liquidity are abundant So if the Fed starts buying bonds and adding liquidity now — while deficits stay huge — it’s essentially monetizing government debt during a boom. That’s not “technical.” That’s a classic late-stage Big Debt Cycle move — where monetary and fiscal policy collide to keep the system afloat. 🧩 The mechanics: QE pushes real yields down Financial assets inflate (especially tech & gold) Wealth gaps widen Inflation reawakens — eventually forcing the Fed to tighten again ⚠️ And that’s when bubbles pop. So yes — the Fed may be stimulating into strength, not weakness. Into a bubble, not a bust. Into risk, not safety. This is the kind of pivot that separates traders from historians.
Here's an example of supply chain risk for some European companies.
Interesting numbers on Nexperia: their chips are used by half Europe's auto companies, 86% of medical device companies and almost all (95%) the mechanical engineering sector. Source: Arnaud Bertrand @RnaudBertrand on X, FT
Total Put/Call Ratio falls to its lowest level since 2020
Bulls are going for it 🚀 Source. Barchart
🚨 HUGE Week Ahead for Global Markets! 🚨
Four major central banks. One defining week. Here’s what’s coming 👇 💵 Federal Reserve — Expected to cut rates by 0.25% on Wednesday, and all eyes are on what comes next for its Quantitative Tightening (QT) program. 🇨🇦 Bank of Canada — Also forecasted to trim rates by 0.25%, signaling growing concern over slowing growth. 🇪🇺 European Central Bank — Likely to hold steady, keeping the focus on inflation trends across the Eurozone. 🇯🇵 Bank of Japan — Expected to stay the course, balancing yen weakness with cautious optimism. This week could set the tone for global liquidity, currencies, and market sentiment heading into year-end. 🌍.
$7,000,000,000,000 sitting in money markets.
As rates come down that $7T will go somewhere. Where? • Gold • Bitcoin • Real Estate • Stocks Source: Grant Cardone
Is the Buffett rule sounding the alarm?
Since the 1990s, global financial assets have grown from 75% to over 200% of world GDP. Source: HolgerZ, Goldman
Gold, Utilities, healthcare and consumer staples are leading the S&P 500 this month
Source: WSJ
US funding market stress >>> Surging SOFR rates signaling a liquidity shortage
The most important indicator, as always, remains the SOFR rate: should the recent drift higher continue, the self-fulfilling cascade of a liquidity shortage will almost certainly be activated. And it did worsen... Source: zerohedge
