Underestimate liquidity at your peril

The 3 month rate of change in the Fed balance sheet (asset purchases) dwarves Q/E II & III with just under $3 trillion added to the balance sheet in the last 3 months. Almost 10X these previous operations.

Volatility has fallen steadily during the last few months, credit spreads have narrowed and we have seen the swiftest recovery in equity markets, ever, repairing much of the trend damage wrought in February and March.

It is irrelevant if we think such liquidity operations are 'right' or 'appropriate'. These are emotionally charged statements that have no place in the evidence based investment strategy Harver Capital follows. Liquidity will continue supporting risk assets for some time to come and we will likely be adding to equities in coming months.