Be Long and Prosper

Macro Perspectives: Thu 26 Nov 2020

Stocks have aggressively moved higher from the lows of 23 March.

The crash in stocks was jarring, but the recovery has been even more impressive - up ~62% now.

We are just beginning to see what asset prices look like when the visibility on a “return to normal” meets an unprecedented sea of global liquidity.

Just how big is the sea (of liquidity)?

Not only has the Fed and other global central banks flooded the world with trillions and trillions of new money, but the Fed removed the reserve requirement ratio for banks. It's now zero. At a zero reserve requirement ratio,the stock of money could increase infinitely.

Translation: The value of money has been destroyed, which means the price of assets go up!

Be long asset prices.