When Dollar Short-Squeeze?
Endless liquidity creation incentivizes investors to overown assets and underown cash. Market forces will have to heal these portfolio imbalances eventually.
In April 2023, I provocatively asked When Short-Squeeze?
I highlighted the incredible level of caution and bearishness of investors evident in numerous positioning and sentiment indicators and I suggested that this was due to excessive recession fears that misunderstood the role of interest rates in a fiscal dominance regime. I argued that this setup had…