I just saw some of you asking what QE and QT are, and actually, they are quite important to understand the current market.

Simply put, QE is when the central bank injects money into the economy by purchasing assets like government bonds. This increases liquidity, lowers interest rates, makes borrowing easier, and encourages more investment. As a result, the stock market rises, and assets become more expensive. That’s why QE is often very good for investors.

QT is the complete opposite. The central bank reduces liquidity by selling assets or not reinvesting, leading to higher interest rates. Borrowing becomes more difficult, people become more cautious, and asset prices tend to pressure downward.

The interesting thing about QE is that it can push up the prices of all kinds of assets, from stocks to crypto. But QT creates downward pressure, which is why markets often worry when the Fed tightens.

Looking back over the past four years, the Fed has been actively implementing QT, making the market quite challenging. But since September last year, when the Fed started cutting interest rates, it also signals that QE policies might be returning soon. That’s very optimistic news for investors. Both policies have a strong impact on inflation, interest rates, and the overall economy, so keeping an eye on them is essential.