LIBOR continues to rise despite injecting liquidity into the system. A cancelled POMO is a good indicator of how fragile the system is right now.
Additionally TED (h/t @gappingandyapping) continues to rise despite central bank intervention. From the definition of TED spreads: “A rising TED spread often presages a downturn in the U.S. stock market, as it indicates that liquidity is being withdrawn.”
However put this into the context, the elastic was stretched very far to the downside, mean revision favored a rally. Now that central banks have stepped in and implicitly guaranteed the bottom isn’t falling out yet stocks may rally all the way into Christmas as burlap clad people relearn their fear of the Great Bearded One and everyone else gets in the holiday spirit but the underlying situation continues to deteriorate.
