US equity markets have been setting new highs despite higher rates and an ongoing balance sheet reduction from the Fed. While much of that strength can be explained by strong consumer demand, corporate earnings and a rampant belief that AI will transform the megatech-companies to godlike entities, there is also another factor at play. Increasing excess liquidity in the US banking sector since early 2023 has made sure there is always an extra dollar waiting to be invested in the latest hype. Coming into April, this market safety cushion will be shrinking fast for the first time since 2022. A reduction in T-bill ... (full story)