MT Capital's avatar
$10.9m follower assets
Quite the evident correlation between big tech multiples and central bank liquidity
Nathan Worden's avatar
Wow yeah, very high correlation. Playing devil's advocate— are there any other causes other than central bank liquidity that might explain causation for big tech multiples to expand like this?

This chart certainly makes a case that central bank liquidity is one of if not THE main cause.
MT Capital's avatar
@nathanworden For sure. I would argue another driving factor is massive amounts of passive investment allocation being directed at these names. Vanguard funds as ex. have allocated quite heavily to the big tech names and they control quite a bit of capital.
Jensen Butler's avatar
@mt_capital1 Great point. Designed to feed on itself. Recurring automatic Friday deposits (or those alike for those that just turn it on and let it groove) creates a beast that snowballs it seems..
Rihard Jarc's avatar
I think a better chart would be the correlation between multiple and central bank liquidity, so that you get a pure comparison of multiple. The market cap doesn't tell the real story IMO.