What follows are the topics covered in this weekend's note to subscribers. To become a client of Zenolytics Turning Points or to learn more click here.
The excerpt from last weekend's note is available here.
In this weekend's 11 page note we discuss:
- The ramifications of a flattening Fed balance sheet at this stage of the recovery
- Indications that liquidity is drying up
- Analysis of the potential for fiscal stimulus to be passed and when it might pass
- The likely reaction to a fiscal stimulus package passing in the near-term
- The earnings season ahead
- Continued analysis of the shifting landscape beneath the market
- Targets for the Nasdaq in October
MARKET UPDATE
The bullish argument as we move into Q4 of a year many are looking forward to putting behind them is largely founded on factors that are now largely accepted as fact. The very act of investors accepting these arguments as being fact equates to capital being allocated in a direction that seeks to take advantage as the perceived outcome evolves through price. Naturally, that capital becomes vulnerable to sudden shocks that challenge the consensus understanding of the time.
In order for bullish positioning to continue experiencing an upside push, investors are now relying on three catalysts to come together:
1. Fiscal stimulus
2. Continued momentum in corporate earnings
3. Continued momentum on the macro economic front
At the same time, the liquidity foundation of the markets is not nearly as robust as most investors assume. Since June, the Fed has refused to grow their balance sheet, essentially cutting off liquidity, relying on momentum from that initial injection to prevent a full blown, long-term economic crisis.
In this weekend's 11 page note we discuss:
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