There is still too much cash in the system.

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It is quite possible that the remarkable and convenient rally in all asset classes in November is due to the liquidity affect from the re-deployment of capital from central bank reserve accounts (bank held reserves in US Reverse Repo Account or the RBA ES account). Simplistically this describes the fact that after successive bouts of QE over the past decade and despite the Federal Reserve interest rate increases that have pushed money growth to negative levels, there is still too much cash sloshing around the system. If the Federal Reserve is going to be patient and not increase rates again, because it has now achieved negative money growth, then this may mean the Federal Reserve has to remain on hold for a very, very long time while it conducts QT progressively to a point where money supply and money demand have moved back into balance on a long-term basis. At an Economics level this is not a simplistic exercise to forecast.

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