This is the true ALT coin indicator.Using these metrics you can easily see when the ALT coin season begins and when it will end, by watching the FEDS balance sheet.
WALCL trade ideas
The History of Global Net Liquidity RhymesThe History of Global Net Liquidity Rhymes
Descending wedge pattern leading up to 2020 vs the one forming now.
Macro Monday 61 - Fed Balance Sheet Signals Liquidity BounceMacro Monday 61
Fed Balance Sheet Hits Long Term Supporting Trend Line
The Federal Reserve Balance Sheet
The balance sheet is published weekly, typically on Thursday afternoons, and it provides valuable information on the direction of global liquidity and the fed’s monetary policy.
When the Federal Reserve’s balance sheet increases, it means that the central bank is acquiring more assets. This expansion can occur through purchases of Treasury securities, mortgage-backed securities, or other financial instruments. The increase in assets typically leads to greater liquidity in the financial system and can influence interest rates. Conversely, a decrease in the balance sheet indicates asset sales and reduced liquidity
The Chart - FRED:WALCL
▫️ Since April 2022 the Federal Reserve Balance Sheet has reduced from $8.973 trillion to $7.140 trillion (reduction of $1.833 Trillion).
▫️ Right now, the chart has signaled that we have hit a critical diagonal trend line support (red line on chart).
▫️ We have hit this red trend line twice in the past (Sept 2019 & Aug 2008) and on both occasions it bounced from the red trend line and the balance sheet thereafter increased significantly for 2 to 5 years.
If you follow me on Trading view, you can revisit this chart at any time and press play to get the up to date data and see if we have held the line or fallen below it.
What does the following mean to you?
✅High likelihood of interest rate reductions in Sept.
✅Apparent stabilization of the rate of inflation (U.S)
✅A current stable labor market in the U.S
⏳The possibility of the balance sheet bouncing from trend support and increasing from the support line as it did in the past for 2 years+ (Increasing Global Liquidity).
Versus
🚨 The yield curve un-inverting (moving above 0)
🚨 Sahm Rule Triggered
🚨 The marginal increase in the U.S. Unemployment Rate which is consistent with prior recessions.
🚨 U.S. Initial Jobless Claims and Continuous Jobless claims have had increases consistent with pre recession historic activity.
🚨Job openings reducing since March 2022 from approx. 12m to 9m (this would be the largest pre recession drop ever if followed by a recession.
🚨 Warren Buffet sitting on the biggest pile of cash ever.
Does this all say “soft landing” imminent or should we be worried?
In my opinion, we will know by Jan 2026. Its a big window of time, but the timing is the biggest challenge, and if we can take one thing from the above, volatility is guaranteed.
Happy Trading
PUKA
USD Liquidity IndexUSD liquidity calculated from treasury and fed metrics. Plotted against the SP500.
Credit to OpenBB for the example:
github.com
Good Liquidity Proxy? Fed balance sheet + BOJ balance sheet adjusted to USD + PBOC balance sheet adjusted to usd - Fed reverse repo - Treasury general account + Assets held at money market funds
Looks as if 1% rise in liquidity = 5% Rise in Crypto
Michael Howell thinks there is a 6 week lag with liquidity and Bitcoin, and 6 month Lag with Liquidity and Gold
Only Allows a Weekly Timeframe.
A more experience trader/chartist I'm sure could improve this draw.
Copy and Paste Below into Trading View:
FRED:WALCL+FRED:JPNASSETS*FX_IDC:JPYUSD+ECONOMICS:CNCBBS*FX_IDC:CNYUSD-FRED:RRPONTSYD-FRED:WTREGEN+FRED:MMMFFAQ027S
Global Net Liquidity dashboardHere is an approximation for Global Net Liquidity:
FRED:WALCL+FRED:JPNASSETS*FX_IDC:JPYUSD+ECONOMICS:CNCBBS*FX_IDC:CNYUSD+FRED:ECBASSETSW*FX:EURUSD-FRED:RRPONTSYD-FRED:WTREGEN
This dashboard shows each of these components.
BLX and the Global EconomyUsing as a reference tool to compare the growth of Bitcoin (BLX chart) with the Global Economy as a metric and finding a solid bottom for the Global Economy metric at the 1.618 retracement in late September 2023
BLX (orange/white) candles
Global Economy (blue/white candles)
Global Economy Includes:
-------------------------------
US total assets
Central Bank Assets for Euro Area * Euro to US Dollar Rate less Reverse Repurchase Agreement (Reverse REPOs) less Liabilities and Capital: Liabilities: Deposits with F.R. Banks, Other Than Reserve Balances: U.S. Treasury, General Account
China Central Bank Balance Sheet * Chinese Yuan to United States Dollar
Total Assets for Japan * Japanese Yen to United States Dollar
NOTE: I have never tried to run a compare in Tradingview so I hope that the BLX compare continues to run alongside with the Global Economy. If this does not run in tandem I will update with monthly snapshots as a feel that this is an important metric in measuring how closely BTC could outpace or under-perform the Global Economy as whole.
▀▀█═╡🤡╞═█▀▀
Federal Reserve Balance Sheet UpdateFederal Reserve Balance Sheet Update
⚠️DECREASE of $47.1 billion week ending Jan 31st⚠️
▫️ $1.34 Trillion Reduction since Apr 2022
▫️ We are $0.436T away from the long term trend line (Red Line). The current trajectory means we could reach this level by Sept 2024
Quantitative Tightening Effects on the Markets This video tutorial discussion:
• What is QE and QT?
• Each impact to the stock market
• The latest QT, how will the stock market into 2024?
Dow Jones Futures & Its Minimum Fluctuation
E-mini Dow Jones Futures
1.0 index point = $5.00
Code: YM
Micro E-mini Dow Jones Futures
1.0 index point = $0.50
Code: MYM
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
Approximated Total Global Net LiquidityCombines liquidity in usd: Major Eurozone countries, Japan, China, USA, and Canada
Federal Reserve Balance Sheet SnapshotFederal Reserve Balance Sheet Snapshot
- Between the 11 - 18th Sept 2023 we had the Largest
one week decline of approx. $74.7 billion since the
balance sheet reduction started in April 2022
- We are currently approx. $50 billion away from a
1 trillion reduction 👀
We are in for an interesting Quarter end to the 2023 year, that is to say the least.
Stay Nimble
Puka
LIQUIDITY MATTERS! Global liquidity vs #BitcoinLook at how the bullish green arrows and bearish red arrows show how global liquidity correlates HEAVILY with the direction of Bitcoin. T
You don't have to be a genius to see how beautiful this correlation is.
And how sensitive #BTC is to excess capital in the system.
As a risk on asset
When ppl have easy money to gamble with , a portion of that ends up in the #Crypto markets.
Currently you can see how aggressive the withdrawal of liquidity is across the globe
In the USA, EU, China & Japan.
QT into 2024 FED Balance sheet target 7.75 TRILLION Targeting FED Draw down towards 7.75 Trillion which equates to a 1.215 Trillion run off of the balance sheet. Coinciding well with the RREPO as the cushion
Liquidity and $SPYThis measure of Liquidity (blue line) generally tracks AMEX:SPY (orange line). Both were generally declining throughout 2022 and then increasing in 1H 2023. However, in the last month or so there has been a marked divergence, the resolution of which may be an important aspect of equity market direction. One to watch.
Fed Liquidity Pump-- the fix is in-- Oh no? Oh no! Oh YEAA! Recently, experienced financial analyst/economist Michael Howell (see footnote 1) has made the case that central bank liquidity (and to a lesser degree, private sector liquidity) is what drives risk-on markets ( NASDAQ:QQQ , KRAKEN:BTCUSD ).
While Dr. Howell uses his own deep analysis to predict that liquidity is now in an uptrend (see any of his numerous video interviews over the past 3 months on youtube), we point out that Elliot Waves have successfully predicted past liquidity changes (2012-2019), and that we now have a new Elliot Wave set up targeting a 35% rise in liquidity over the coming 24 months!
Based on a reading of Dr. Howell's material, we can approximate Fed-sourced liquidity roughly by using a formula that makes use of the following weekly data-points:
FRED:WALCL (Federal Reserve Balance Sheet)
FRED:WDTGAL (US Treasury General Account)
FRED:RRPONTSYD ("Reverse Repo" facility)
" But but... the recession! "
" But but... earnings! "
" But but... CPI still over 2% "
Will risk-on markets follow liquidity, or will they follow the main street economy? Dr. Howell and Elliot Waves point to the former!
footnote 1:
Founded CrossBorder Capital in 1996. Michael developed the quantitative liquidity research methodology while he was Research Director at Salomon Bros. from 1986. He was subsequently appointed Head of Research at Baring Securities in 1992, and was top-ranked “Emerging Market Strategist” by institutional investors for the three years prior to setting up CrossBorder Capital. Michael has worked in financial markets since 1981 and is a regular international conference speaker. He is a qualified US Supervisory Analyst and has a Doctorate in Economics.
(from crossbordercapital.com)
Central Bank Liquidity vs US MarketsThis chart presents central bank liquidity (credit: @DylanLeClair_ on Twitter for the calculation). It demonstrates a consistent pattern: when global liquidity decreases, the US markets also decline. The chart highlights the notable trend of the Relative Strength Index (RSI), particularly as the US markets attempt to push higher. This information provides insight for investors and analysts, enabling them to gauge market movements and understand the influence of global liquidity changes on the US markets.
AMEX:SPY SP:SPX TVC:RUT TVC:DJI NASDAQ:NDX
global net liquidityFED+BOJ+BOE+ECB+PBOC-TGA-RRP
this is Global Net liquidity of Major World Central Banks.
Central bank liquidity is a pretty good indicator for SPXWatching a pullback take place in central bank liquidity usually correlates with retracements in SPX (albeit sometimes lagging). If it explodes higher, that could possibly mean two things, we're in the actual QE stage (we're not there yet despite what many others claim) and that would suppose the actual crisis has started. I would expect the move to be down first in such scenario, even with central banks propping up the market with liquidity.
Federal Reserve Balance Sheet Projected to Exceed $19 TrillionWave structures on these Economic Indexes tend to play out fairly often, such as in the case for Various CPI and Interest Rate Charts which can bee seen in the Related Ideas tab below. With that in mind, I now turn to The Federal Reserve Balance Sheet; and when I look at the Balance Sheet what I see is that since the Inception of this chart, it has traded within an Equidistant Channel that can be easily viewed and plotted in Log scale.
When I look deeper into this I can also see that since around the end of the 2008 GFC when mass bailouts occurred, the RSI on the Balance Sheet has typically stayed Elevated and Above the Bullish Control Zone: meaning any time spent below the level of 70 has typically been followed by insane expansionary rallies, thus huge continuations in the rapid increases of the Balance Sheet.
Additionally, it can also be seen that as of recent times (notably since the mid 2010s) the MACD has become a great indicator in the form of Hidden Bullish Divergences appearing just before huge continuations to the upside; these mid 2010 events align with the blunder that were the taper tantrums in which the fed ultimately capitulated on their monetary tightening stance and decided to expand the Balance Sheet Exponentially Higher and now looking at the chart we can see yet another Hidden Bullish Divergence forming that will be confirmed at the close of the month after the next trading week signaling that another big wave up is about to begin.
Lastly, when zooming all the way out and taking in all the data at once, it can be seen that we are in what looks to be an AB=CD wave structure in which the first expansion was a 400% Expansion and the Current Expansion is on the way to being yet another 400%. We are currently about halfway there and the AB=CD Wave Structure would suggest that the Federal Reserve will more than double it's Balance Sheet by 2026 as the Federal Reserve capitulates yet again in an attempt to save the current fragile economic system.
#BOND crisis to fuel monetary expansion The Fed is damned by inflation if they print, damned by bank runs if they dont print. And with recession on the way, history shows we could plumb to new lows if the Fed only prints enough to backstop banks and pensions. Early 2000s and early 1930s were two such cases where the Fed aggressively lowered rates for well over 18 months but markets continued to trend lower anyway. But 2008 ushered in central bank quantitative easing, so with QE at the Fed's disposal, it is more likely the growth of M2 will accelerate which will keep inflation stubbornly high if not higher.
A new factor that wasn't present before is that we have increasing M2 from China and Japan which has been a large driver of the market bounce we've seen in stocks and crypto since the start of the year.
The 2-yr and 10-yr rates are heading lower in a hurry. CME Fed futures currently predicts one more 25 bps hike to a terminal rate of 500-525 then three consecutive drops of 25 bps. Higher inflation would become the standard as the Fed would be forced to accept a higher inflation target well above 2% which Ray Dalio had predicted in one of his published pieces.
FED Balance Sheet Expansion: Asset Purchases to Continues?In this chart analysis, i'm exploring the potential trajectory of the Federal Reserve's balance sheet, considering the possibility that asset purchases will continue until reaching the $13T-$16T range. Historical events like the 2008 financial crisis and the 2020 pandemic have demonstrated the central bank's willingness to expand its balance sheet to support the economy.
Starting with the 2008 financial crisis, the Fed implemented several rounds of quantitative easing (QE) to inject liquidity into the financial system and stabilize markets. This caused a significant expansion of the balance sheet from around $1T to approximately $4.5T by late 2014.
Fast-forward to the 2020 pandemic, the Fed employed a similar approach, launching aggressive asset purchase programs in response to the unprecedented economic shock. This led to another massive surge in the balance sheet, which currently stands at over $8T.
The chart indicates a steady upward trajectory in the Fed's balance sheet, with the possibility of reaching the $13T-$16T range in the medium to long term. This scenario assumes that the central bank will continue to buy assets in response to economic uncertainties, inflationary pressures, or future crises.
For traders, this ongoing balance sheet expansion may have implications for various asset classes, including equities, bonds, and commodities.
A continuously expanding balance sheet could support risk assets and suppress interest rates in the short term. However, concerns over inflation and potential policy tightening may create headwinds over the long term.
In conclusion, the Fed's balance sheet growth highlights its active role in managing the economy during turbulent times.
Traders should monitor the central bank's policy decisions and anticipate potential market reactions to shifts in the balance sheet trajectory.
Cheers!
Kripti.
