Tuesday, June 30, 2009
ACE LIQUIDITY RELATIONSHIPS
is the name of the FIRST LINK in my list, about 2/3's down the sidebar.
The first chart is Hi-Grade Corporate Bonds [ LQD ],
divided by Treasury Securities [ IEF ].
Like the Euro-YEN currency pair does in currencies, the LQD: IEF shows the willingness of Bond Holders to step outside their "Comfort Zone" towards RISK.
Generally speaking, this relationship addresses how much funds the Treasury is
injecting into subject market via REPO's, and other devices. Intervention trackers do a good job of sniffing them out.
Check the correlation against EQUITY MARKET Moves,
and IMO, the link is DIRECT. Viewed thru a shorter lens, it is not so glaringly apparent, as it is via the longer charts.
More to the point, there are always apparent "EXPLANATIONS" WHY, offered by TALKING HEADS and "Monetary Authorities" and 'Officials'. SMOKE & MIRRORS ! ! !
Gold does a good job sniffing certain moves, and Silver as the more volatile of both PM's vibrates incessantly when the Monetary Authorities play their games thru their "Dealers".
Watching a number of indicators MIGHT help, but in the end its the PUMP that matters, and as long as they are pumping Liquidty, the upward curve, ever increasingly subject to Gravity and the law of decreasing returns, will try, try, try
to climb THE HILL, and at some point will cease to be as effective as previous.