"Same same. But different."

A familiar reply, reportedly, to tourists in Thailand asking about the provenance of market goods ("Is this real Gucci?") or directions back to the hotel ("I don't think we came this way"). And also one to keep in mind this market cycle.

Same downturn format as prior cycles. But different. There are several examples in this growing trough of economic models breaking down - or just temporarily behaving oddly non-linearly, if one prefers. Take this one, for instance.

Exhibit 1: Global Liquidity and the S&P 500

The parting of ways of the last few data points is not unprecedented. And given the state of bank balance sheets it is understandable. But it is still unusual.

With significant - and increasing - amounts of liquidity building up (the latest data point for September represents a 17% year-on-year increase in this measure of global liquidity), ever greater public sector market participation and languishing equity one does wonder what issues are gathering strength for further down the track.

Sources: Federal Reserve Statistical release and St Louis Fed (FRED)

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