Yesterday, the US Federal Reserve' Minutes from the July meeting of the Federal Open Market Committee showed that monetary policymakers "intend" to reduce the central bank's bond purchases in 2021. [Read the FT article, Most Fed officials believe stimulus could start winding down this year.] This is a long-overdue decision. 
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‌That said, this will be a delicate balancing act simultaneously as inflation and real growth are bouncing back quickly. The two factors could dramatically reduce excess liquidity, which has been the main factor behind soaring asset prices and corporate earnings in the last twelve months. This is a process, which has already started after a sharp recovery in nominal GDP growth in Q2 at the same time as M2 growth has slowed significantly. [See the charts below.]
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‌In the past, this has been associated with a significant stock market sell-off six to twelve months later. If correct and the "excess liquidity" contraction started in early Q2, this means a significant sell-off in the last quarter of 2021. Insightview sees the "excess liquidity" factor as important for most of what this website describes as "imbalances" in the global economy and financial market. Aggressive money printing in the United States and Europe has pushed real bond yields deep into the red. [See the charts below.] This will reverse if Insightview proves correct about the "excess liquidity factor".
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‌The above does, admittedly, not change the fact that monetary policy is still accommodative in the short run. Real policy rates are still negative. Nonetheless, the factors mentioned in this article show that the situation is changing rapidly, which could create heavy headwinds to asset prices. 
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‌Unfortunately, this occurs at the same time as the Covid Delta variant will worsen the imbalances in the global supply chain, which was also outlined in an Insightview article published yesterday. [Read yesterday's Insightview article, The global bottlenecks will not go away because the Delta variant will aggravate the mismatch between the supply and demand sides. The US Federal Reserve will soon have to make a difference.] A few minutes ago, this was underscored by a new supply-linked warning from Toyota. [Read the Nikkei Asia article, Toyota to cut September global production by 40% from previous plan.]
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‌18. August 2021 - Vacation: There will be no updates from August 23 to September 3, 2021
‌18. August 2021 - The global bottlenecks will not go away because the Delta variant will aggravate the mismatch between the supply and demand sides. The US Federal Reserve will soon have to make a difference
‌20. May 2021 - The Federal Reserve plays with fire: Talking about tapering amidst the risk of an 'automatic liquidity squeeze' should gain attention among investors
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