• Quantitative tightening is not strong enough to pull the markets down

    As we can see below, since October 2017 the Fed's quantitative tightening - reduction of its balance sheet - pulled about 150 B$ of liquidity out of the markets.



    During the same period, excess reserves decreased by 400 B$. This means that in total since October 2017, an additional 250 B$ helped pushed the markets higher.



    With the US/German rates differential moving back close to its highs, it is only normal that money will continue moving into US assets and the US$.







    Conclusions:

    These trends imply that the S&P500 price bubble is set to continue.