U.S. stocks shrug off trade deal concerns, close higher
It is the record rally that just keeps on running stocks touching new all time highs again today but our next guest says you should probably enjoy the good times while they last because they won't offspring and northbound traders spent Henrik who stayed up late for US overseas then and we do appreciate it. I mean you and I have talked a lot about this worldwide exchange of the programs. This is as the market whether you want to call it the Fed steroid or whatever it might be. Just won't quit anything in the charge that you see that indicate to you. This thing is about ready to roll over not about my charter. Actually on on massive sell but the liquidity momentum is extremely strong. And it's it's like the Fed has been playing secret Santa all year long handing out gifts of asset price inflation and the big issue for me is what I what I see here in the macro context first of all is to say that two thousand nineteen has been read revelation Central banks cannot extract themselves from the monetary easing being monstrosity. They've created two thousand. Eighteen was the only year since the financial crisis with central banks actually reduced liquidity on the net basis and immediately blew up in everybody's face and so two solution in two thousand nineteen was go right back into adding liquidity with obviously global rate cuts everywhere aware and then the addition of Qe and not itself. So we're we're basically stock where we're exiting this decade the same way we entered it kicking and screaming with trillion dollar deficits massive central bank intervention load to negative rates. And absolutely no iota of vision on how we're are ever going to raise rates again or reduce balance-sheets because they all going into twenty twenty just pressing the pedal to the metal. So the question is what's the endgame amy old admittedly and and what we see is there's no bull market without central bank intervention and that's the big challenge for the for the next decade but there there is central bank intervention. So I I assume the bull market could keep going. I mean it's hard to believe spend but twenty years ago. I was in this building reporting on sort of the Nasdaq boom in the Internet. Boom is there anything anything when you look at the charts and not trying to spook anybody here but when you look in the charts. Is there anything technically or in the policy construct or whatever that resembles ninety nine. Well actually. This is really interesting. What's happening this year? Keep in mind. When when the Fed we have to divide the year into two parts the the first nine months and the last three months the first nine months was all about you know ending? The quantitative tightening and Unin became about rate cuts to cut defense out of cut rates three times seventy five basis points but then. Everything changed in October. When the Fed was forced to respond to the overnight rate issue the the report crisis in September and basically in October the Fed went wild they're adding balance-sheet and liquidity? At a rate we've not seen since the two thousand nine in crisis so basically acting like this big crisis underneath what's happening with all this liquidity. It's it's accelerated markets higher and brought a lot of sectors stop were struggling beforehand. What's really interesting here is that this is Kinda the same as construct We saw nine hundred ninety nine. Remember nine thousand nine hundred eight. We had a a twenty percent. Correction the Fed. Cut Seventy five basis points. We had the big rally in one thousand nine hundred nine but it didn't really kick off until until Alan Greenspan span came in late in the year of nineteen ninety nine and added a bunch of liquidity in anticipation of the White UK crisis and that lifted markets of dramatically and then ended up topping in March of two thousand the extended all this liquidity added. Here is artificial and has to be pulled back back. Markets maybe overshooting real quick though. Is this inflation. Or we having reflation trade or we having ultimately setting up for deflation sounds to me like a bubble that bursts that still gets us back to deflation even though always going higher copper is going higher etc.. You know it's interesting I. I'm looking at some big structural charts like gold gold as a big bowl flag on it. Petit has a bull flag on it. And if you look at a actually the the rate action here in in Q.. Four it hasn't confirmed this rally at all in bear flag so we've yet to see the Rian flation evidence in terms of the Bond Market Henrik north man trader raiders spend. We have pre. Listen I. It's been you've been strong and on this market. I know it's been a tough market if you've been short but you've you've come out and you've been honest about the calls and and where you feel about it so it's been Henrik. We do appreciate you coming on. Thanks for staying late overseas. We'll see again appreciate that. Thanks Brian. Listen guys I think spend take some heat because they'll say I'm negative. Negative given the market has gone up. But what he's saying is if and win the Fed ever pulls back Right at this market is going to. That's is exactly right. And his point that central banks tried to do that in two thousand eighteen and it led to twenty nine. Thousand nine is a scary tale. It's just it's a cautionary because eventually we are going to get back where we have to removed that liquid it is. It is interesting that when you start to see what everyone's judging this on rates and rates alone start to look at balance sheets where qt was ineffective. The same result is raising rates at every meeting and now Q. E. adding in the same results as cutting so they're not doing anything to rates. They're actually cutting rates by proxy through through their people people. Come up they probably come to you guys all the time and they say why isn't impeachment affecting the market you know why because impeachment whoever's in sixteen hundred Pennsylvania Avenue you can't compete with a trillion dollars in central bank liquidity.