Liquidity is the Catalyst Behind the 2023 Rally
Updates on Real Net Liquidity and what is left of the Treasury General Account
Liquidity, possibly the market's most potent undercurrent, could be the engine fueling this year's stock market surge:
As we stated in our previous article, The Real Pivot:
“The market’s expectation is that the remaining half trillion dollars in the Treasury General Account will be there to continue to provide liquidity to the system until around June 2023, due to the politics of the debt ceiling…
This is what the markets are expecting, and this is the fuel for the current rally. This puts a floor on the downside, until something changes.”
We're stepping into June, and change is on the horizon.
Of the highlighted half trillion dollars: 86% has already been used up.
Take a look at the remaining balance in the Treasury General Account:
And now, debt ceiling theatre. Fun!
But we refuse to get involved any more than we have to.
Reflecting on 2011: After the debt limit was hit in May, the market plateaued for several months. Then, following the debt increase agreement in July, the market plunged 17% within just five days.
Will it be sell the news again this time?
It's worth mentioning that concurrently, gold prices soared beyond $1900 for the first time — a record high that wasn't challenged until 2020.
The reasons to own gold continue to pile up. Stay tuned for our upcoming issue where we'll explore this in greater depth.