Arthur Hayes Shares His Market Review and Warning

Arthur Hayes has recently shared a sophisticated overview of the current state of the financial market, which not every user understood correctly. Here’s what he actually meant.

The statement «As expected, the TGA continues to decline which is liq +ve» means that the Treasury General Account (TGA) is continuing to decline, as anticipated. This is seen as a positive development for liquidity, as the decline in TGA could potentially increase the supply of cash and other liquid assets in the economy.

Stay focused. As expected the TGA continues to decline which is $liq +ve. This risk rally has room to run unless the Fed wants to alter its pace of QT. pic.twitter.com/wgGmZPbWau

— Arthur Hayes (@CryptoHayes) February 17, 2023

The phrase «liq +ve» is an abbreviation for «liquidity positive,» meaning that the decline in TGA is viewed as a positive development for liquidity in the financial system.

The statement «This risk rally has room to run unless the Fed wants to alter its pace of QT» suggests that the decline in TGA may be contributing to a «risk rally» on financial markets, and that this rally could continue unless the Federal Reserve decides to alter its pace of «QT,» or quantitative tightening. Quantitative tightening refers to the process of reducing the size of the Federal Reserve’s balance sheet by selling assets such as Treasury securities.

The statement implies that if the Federal Reserve were to slow down or reverse its QT program, this could potentially have an impact on the risk rally and financial markets more broadly. This is because the pace of QT can have an impact on the supply of Treasury securities on the market, which can in turn affect interest rates, liquidity and other financial market conditions.

In terms of the cryptocurrency market, any rise of risk tolerance among investors will lead to a positive price dynamic on digital assets.

Source