The major lesson that big financial players learned from the meltdown of October 2008 is that systemic illiquidity is extremely perilous and has to be avoided at all cost.
As machine based trading predominates - with ever more complex algorithms being created - the key to keeping markets liquid is to create the conditions for, both encouraging and exploiting, constant disagreements about the dominant theme or interpretation of the macro-environment.
We should expect rotation through sectors (geographical and economic) and an ongoing propagation of the inflation/deflation dichotomy to drive continuous asset allocation shifts and in turn foster market liquidity.
High frequency thematic rotation, and the holding of assets predicated on this form of pure market timing, is the new bubble. Value is not created by market timing, I would maintain, only transferred.
Thursday assorted links
30 minutes ago