How To Navigate The Stock Market Liquidity Crisis In 2024?
The Crash That Never Happened in 2019 is All Set for 2024!
After a dream-run lasting for over a year now, equity markets around the world are staring at the prospects of a severe liquidity crunch, the likes of which was last seen 5 years back – in 2019. However back then, inflation was NOT a problem, and hence Fed back then, was able to very easily change policy – literally overnight - and pivot from Quantitative Tightening (QT) to Money Printing (QE), so as to inject liquidity into the financial system and in the process, rescue the financial system (including NOT just equity markets but also the Repo market).
However, conditions are very different today, when inflation is a very real problem. And that would made it very difficult for the Fed to go back to money printing and inject liquidity, should we encounter a 2019-style stock market liquidity crisis in 2024, because the Fed going back to money printing (QE) could well mean that inflation could once again start to spiral out of control. Hence it won’t be prudent to depend on the Fed to rescue the financial system as and when a 2019-like liquidity crisis starts. That’s why it’s even much more important for investors right now to have an actionable framework through which they can continuously monitor the liquidity situation and take appropriate defective measures with respect to their investment portfolios, if and when a liquidity crisis kicks in.
Watch the full YouTube video below on “How to Navigate the Coming Stock Market Liquidity Crisis in 2024?”
Also watch our last YouTube video on “How to time the upcoming market crash?”
In this video, we explore an investment strategy that can potentially help navigate this on-going rally in equity markets right up to the eventual “market peak”, and also help reliably get out of markets before a material correction kicks in. The three market parameters/market inflection points that form the basis of this investment strategy are:
Reverse Repo (RRP) Facility: Data on RRP can be found at: Fred-stlouisfed-org-RRP
Fed Funds Rate (FFR): Data on FFR can be found at: Fred-stlouisfed-org-FEDFUNDS
“Un-inversion” of the Yield Curve: Data on the Yield Curve can be found at: Fred-stlouisfed-org-YIELDCURVE
(Yield curve is negative right now i.e. as of 14 Apr 2024… once the value of the Yield curve data available on the above URL turns positive, that’s the point the Yield Curve would be said to have “un-inverted”)
Also watch our last dedicated video on the Reverse Repo Facility (RRP) and its significance
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Read a Blog: How to Time the Upcoming Stock Market Crash in the Nifty 50?
