Throughout COVID19 crash and restoration, US federal authorities and Federal Reserve injected to 10.6 Trillion USD to the market offering liquidity, which turned out to throw gasoline on inflationary fires [SOURCE]
Now per Bloomberg, 7.6 Trillion USD has been evaporated in NASDAQ alone as of 05/13/2022 [Source]
From my understanding, I dont suppose this consists of SPX/DJI, so maybe, at this level, all the cash Fed injected to the market since MAR2020 are merely deleted, if no more printed cash from Fed, so is it nonetheless cheap to imagine inflation will go to peak?
So whereas I perceive that the limitless cash injected to the economic system can flow into in commodities sectors, what makes us suppose that inflation will nonetheless be steady, when demand can be destroyed as Fed’s intends to take action, particularly when all the cash are already spent and gone?
That is occurring even earlier than Fed’s steadiness sheet on QT and hike rates of interest sufficient to what they name impartial charges (which all Fed members imagine it is situated someplace between 2.0 and three.0).
If Fed intends to remove liquidity of their steadiness sheet, like a number of funding report signifies, recession is close to the nook and in that case, commodities worth can crash as gentle pace as every other massive tech when demand is waning out, and if inflation charges is crashed and beneath management, is not it one other time to spend money on massive tech and ARK’s associated shares (or Bond as properly)??
Only a thought to consider to steadiness out between how a lot limitless cash from Fed has been injected to the economic system since MAR2020 and the way a lot market cap has been worn out.
I dont have PhD in economic system, so I dont know all, however my simple arithmetic suggests that every one the cash Fed injected are spent and there actually isn’t any have to do QT and rate of interest hikes. However I’ve been incorrect and can be incorrect, (and most significantly, I dont have something to say in determination making course of) whereas Fed is very decided to extend the speed hikes.
