Liquidity reasonings

[immartian]

on 2023, some predict that the liquidity would set to rise strongly based on the following pretexts:

• Global Liquidity is at ‘maximum tightness’ and is already starting to inch higher. 2023 could see strong gains, as did 2001 following Y2K
• China’s PBoC has jump-started liquidity injections and the US Fed is again adding liquidity (US$109 billion). On top of the weaker US dollar and oil prices will underpin rising liquidity
• Taking 2001 as the benchmark year for 2023: bonds will be flat and stocks at best range bound, but generally weak. Profits may suffer for another 15-18 months.

However, I wonder how long or how much this bounce would happen.

[immartian]

Savings & Fed balance sheet:

• https://archive.ph/MLVhR#selection-1949.0-1956.0

Consumer indebtedness is rising, another sign some households are running low on savings. According to the [New York Fed](https://archive.ph/o/MLVhR/https://www.ft.com/stream/6fe46b95-9b89-4765-ae25-b2ab71a4b90a), total household debt increased $351bn in the third quarter, the largest nominal increase since 2007. Credit card balances ballooned 15 per cent over a year earlier, the biggest rise in two decades. And while the rate of delinquencies — debt more than 30 days past due — on consumer loans and credit cards remains below historical averages, it is on the rise.

• https://archive.ph/xlrV5#selection-431.0-815.407

the Fed could try to rebuild bank reserves - an important pool of market liquidity - by increasing the rate it pays on those reserves, or cutting the rate it offers to money market funds to park their liquidity at the Fed, or both. It could also limit money market funds' use of reverse repos.

[immartian]

other related measurements:

1 The global money supply: This is a measure of the total amount of money that is available in the global economy. It is often measured using metrics such as M1, which includes physical currency and checking deposits, and M2, which includes savings deposits, money market securities, and other types of deposits. 2 The global credit market: This is a measure of the total amount of credit that is available in the global economy. It can be measured using metrics such as the total amount of outstanding loans, the total amount of bonds issued, and the total amount of credit provided by financial institutions. 3 The global interbank lending market: This is a measure of the amount of lending that takes place between banks and other financial institutions. It can be measured using metrics such as the London Interbank Offered Rate (LIBOR), which is a benchmark interest rate that is used to determine the cost of borrowing for banks. 4 The global foreign exchange market: This is a measure of the amount of foreign exchange trading that takes place in the global economy. It can be measured using metrics such as the total value of trades that are executed on foreign exchange markets, and the total amount of currency that is bought and sold on these markets.