I’ve posted a couple of times now about tightening liquidity in Europe. Lest I be confused with a panic-sowing perma-bear let me briefly post once again on what the authorities (The Fed and other central banks) are doing, and can do, about it.
Check out this very small piece from Barry Ritholtz, about Fed swap lines, it wont take long to read:
Fed and ECB to do more to ease credit stress?
Recall the response of the ES the last time there was an announcement from the central banks regarding increased liquidity provision (POP!).
And just to clarify – my purpose behind posting on developments such as the liquidity squeeze is not to join the perm-bears, but to remind myself to be aware of what is driving the markets and to bear this in mind when trading them. (ps. The liquidity squeeze is important, but don’t disregard oil price, copper, etc. etc.).