December 18, 2021

Is A Liquidity Shortage Developing?

Conventional wisdom says that there is too much liquidity around, which will keep pushing up asset value.

This Alpine Macro chart tells a different story: it says that much of liquidity has already been absorbed by exploding asset value and there could be a liquidity shortage developing.

Is the Fed about to make a similar policy mistake as it did in 2018? Why is the yield curve flattening? Should we trust Jay Powell?