DXY is on a "dead cat bounce." IF it clears 93.50 we can then reassess but, as of right now, there is no deflationary risk. Another clue is that everyone and their mothers-in-law is expecting another deflationary shock, hence it won't happen. Powers-that-be will take the DXY into the mid 80s if they need to.
Lots of people being shown the precipice, lots of fear mongering, both on the USD front, the equity markets as well as cryptos. That, to me, is a sign that Big Money is looking to take everything higher. The next economic retracement isn't going to be a recession, it's going to be a nasty depression and the markets are going to go to really stupid levels before the house of cards comes down. I believe, from an EW standpoint, we're on an extended wave 5 of 5 of 5 of 5 of 5. "Toppy" isn't the word, it's what comes next.
My two cents.
I should clarify when I say deflationary event i mean anything from small-large, essentially a sell off event of some kind which relates across many segments. I’m not saying this is a biblical crash by any means.
The problem with your theory is the banks just put a record 0.8T of cash back in with the Fed to earn interest.
JPM and others have also said they are hoarding cash. A stack of the QE isn’t entering the market and instead is being held back in cash therefore big money isn’t looking to take the market to take it higher, they see the markets are at risk due to extreme high PE ratios and parabolic nature of some commodities (eg lumber) which ironically they caused.
It’s a good example of why QE is not the answer. All they did was cause cost push inflation when what they want is demand pull inflation. We have just seen a point where even with free money, banks lose confidence in the market and begin hoarding cash.
It might be June/July for things to work itself out.
Regarding crypto, All they needed to do was get it to 42.2k and at that point a wave of liquidity enters (massive order book above 42k). It’d go straight to 47k, instant 15% gain if they get it there. This is no secret, instant riches!!!! We know the cash is there to do it. institutions are loaded to the eyeballs with cash yet just like the rest of the market they don’t want to put it into the system and this includes crypto.
Flex gave me good advice. Be more retarded. It truly is as simple as this:
Retail buyers are the bag holders of last resort. Institutions do not FOMO over the top of a retail FOMO.
We go down until retail is rug pulled and squeezed out.
