Investment strategist Raoul Pal anticipates a significant influx of funds into the financial markets, potentially altering the dynamics for risk-oriented assets.

In a recent discourse shared with Real Vision’s Julien Bittel, Pal suggests that a confluence of factors is poised to enhance global liquidity, which he believes is a pivotal force propelling risk assets, including cryptocurrencies.

Pal posits several developments that could inject liquidity: “The Treasury may deplete the Treasury General Account. The cessation of the Fed’s quantitative tightening is on the horizon. The reverse repo operations might conclude. There’s a possibility that Fannie Mae will receive legislative authorization to introduce equity release mortgages, injecting potentially trillions of dollars. Additionally, we’re anticipating some form of tax relief or fiscal stimulus.”

On an international scale, Pal speculates, “Japan might engage in currency intervention by selling dollars, thereby infusing the global system with liquidity. It’s likely that other nations will follow suit in enhancing liquidity, with China, in particular, needing to bolster its own.”

He also references the forthcoming Basel IV banking regulations, which mandate increased liquidity reserves for banks, and the fragility of the commercial real estate market as potential liquidity sources.

“Basel IV’s implementation next year could lead banks to acquire more bonds, adding yet another source of liquidity. Commercial real estate could also play a role. If the situation deteriorates, the Fed might establish a special-purpose vehicle to manage these loans, a strategy reminiscent of the early ’90s savings and loan crisis,” Pal elaborates.

Recently, Pal has spoken of an impending ‘banana zone,’ a phase characterized by dramatic surges in risk assets.

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Disclaimer: The views at The Daily Hodl do not constitute investment advice. Before engaging in high-risk investments in Bitcoin, cryptocurrencies, or digital assets, investors should conduct thorough research. You assume full responsibility for your transactions and trades, along with any resulting losses. The Daily Hodl neither endorses the purchase or sale of any cryptocurrencies or digital assets nor acts as an investment advisor. Note that The Daily Hodl is involved in affiliate marketing.
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