Cash Flow Analysis: The Fuel Behind Every Move
In modern financial systems, asset prices are not just determined by intrinsic value, but by the amount of cash 'roaming' around looking for growth. Liquidity is the fuel for the stock and crypto market engine.
Net Liquidity Formula
We monitor three main components of the Federal Reserve balance sheet to calculate actual liquidity available in the market:
Net Liquidity =
WALCL -
TGA -
RRP
FED ASSETS (WALCL)
Total assets on the Fed balance sheet. Higher assets mean more money in the system.
Total assets on the Fed balance sheet. Higher assets mean more money in the system.
GOV SAVINGS (TGA)
Government savings account. When the gov saves (TGA rises), they pull liquidity from the market.
Government savings account. When the gov saves (TGA rises), they pull liquidity from the market.
PARKED CASH (RRP)
Cash 'parked' by banks at the Fed. This money doesn't flow into the real economy or markets.
Cash 'parked' by banks at the Fed. This money doesn't flow into the real economy or markets.
Core Question: 'Is there enough gas in the tank to keep the market moving higher?'