The Investment Landscape Is Set Up For A Wipeout

What’s going to happen when all the recent inflows, which exceed the combined inflows since 2001, get nervous and decide to exit?
What happens if they do it when the bid isn’t very deep (which is very likely)?
The investment landscape is set up for a wipeout. pic.twitter.com/QCeTCeEzKk

— AnilVohra1962 🇬🇧🇨🇦 (@AnilVohra1962) January 6, 2022

2/ ..not be able to eg 4 hikes and the curve is inverted.

So reducing the balance sheet could be the primary tool. Makes sense.

Here’s where I think the problem with that is. It’s dependent on market forces eg the slope of the yield curve so think about a scenario…

— Endless Capit🅰️l (@endless_frank) January 6, 2022

4/ ..that have been priced out 10yrs due 2 ZIRP & it’s a double edged sword.

If long rates rise the Fed will hike the short end more, if long rates stay low the Fed can’t hike so they’ll reduce the balance sheet more.

Either way multiples contract & the 🐓’s come home to roost.

— Endless Capit🅰️l (@endless_frank) January 6, 2022

Federal Reserve officials signaled greater discomfort with high inflation at their meeting last month, where they eyed a faster timetable for raising interest rates this year. https://t.co/2u5iBkBnDC

— WSJ Central Banks (@WSJCentralBanks) January 6, 2022

https://twitter.com/AndysCycles/status/1478924417812115465

$spx sentiment pic.twitter.com/YZ87CxeWt9

— Álvaro Oviedo (@alvoviedo) January 6, 2022

Meme triangle as reversal pattern $GME, $AMC pic.twitter.com/IJ6MYF3ckv

— Sunchartist (@sunchartist) December 1, 2021

The Fed consistently surprised in a hawkish direction since mid-202, tapering earlier than expected, then accelerating taper, going from 1 to 3 hikes in 2022 & putting balance sheet run-off on the table for 2022. Looks like the real 10-year yield (orange) is finally responding… pic.twitter.com/Ypm0eb3Wbv

— Robin Brooks (@robin_j_brooks) January 6, 2022