What a year; what a decade. In the past 10 years, the fallacy of the mainstream media has been that FED liquidity is the most determining factor in equity returns, but that’s only a small part of the bigger truth.
On Wednesday and on Thursday, we saw record up-days with the major indices. It’s not a surprise, given how oversold they were, on a short-term basis, but looking at 2019, we know that central banks want to keep tightening rates and shrinking their balance sheets.
Two scenarios lie ahead. In one of them, we’re out of the woods pretty soon here, with bulls gaining control of the major indices again, following a tension release after the mid-term elections. We’ll be off to the races again, in no time.