Our Models Were Right

A couple of weeks ago, we presented some of our models that were telling us to expect weakness in the market. During the past week, they have been proven prescient.

Taxes have been significantly higher this year compared to last, and April’s Tax-take has drained ~ $300B from the economy in just 5-days.

$294B has been drained from the economy since last Thursday. In spite of the higher nominal-spending, the net-transfer is lower this year than last; +$677B compared to last year’s +$829B. Taxation is affecting liquidity, and liquidity affects the stock market.

The reserve model is predicting a bounce, followed by more weakness.

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