Market Liquidity

Sharing with you a warning sign that I previously described, there are liquidity concerns in the market 9/20. The Daily tax return, that is the money collected by internal revenue on a daily basis, (month to date and year to date basis noted), of all the metrics of liquidity, most closely correlates with market behavior. The more people withhold and corporations estimate their taxes, theory has it, the more the available cash to chase investments. The correlation, while far from 100% nonetheless plays out in the market often within days. Compare recent date DTR to that of a year ago. (Compare month to date with a year over and the same for YTD.) http://www.fms.treas.gov/dts/07092100.pdf Last year’s dates are in the DTR Archive file, scroll to the same date, 2006.
9/18 Daily Tax Revenue trailed last year by 81%. Month to date trailed by 3%. Year to date 2007 comes out ahead of 2006 by 6%. The National debt had increased by 6%. These figures are way weaker than last year. On the 19th, the numbers looked better: +332%, +1% and + 6%. On the 20th, however, the numbers were negative clear across: -73%, -3% and -12% National debt up 500 billion year over. On the 21st, it looked a little better with day’s receipts +177%, MTD -0.4% and YTD +6%. The current trend must be based on the daily values whilst the month to date reflects recent market weakness. The average year over gain for the most recent reported 4 days (18th through 21st) of 9/2007 comes out 88%, correlating with the last few days market gain. A lag of 3 to 4 days may be expected. My concern centers around the negative YTD on the 20th and a current “year over” year-end gain by the 21st of only 127 billion. The total year to date collected amounts to 2.174 trillion, a budget short fall at least --- National Debt 8.9 trillion. I’ll hold my breath until after October 13th. That’s the initial date of the 1929 depression.
A devaluated dollar, as is currently the case, may lead to inflation, noting that stock prices inflate as well.