You said it - and that is why I think this is coming again.
Posted on 08/20/2015 5:29:26 PM PDT by SkyPilot
If nature abhors a vacuum, investors aren’t so crazy about them either.
It’s hard to avoid all the voids right now. The August Wall Street vacation evacuation is well underway, markets are facing an absence of inflation, huge air pockets underneath commodities and emerging-market currencies – and a vexing lack of clarity about what the Fed might do in less than a month’s time.
The collective response to this environment devoid of strong conviction has been to pull cash out of riskier markets and wait. Barclays Capital says more than $90 billion has sought the shelter of money-market funds in the past six weeks. That’s roughly the same magnitude of flight response seen in other “risk-off” spasms of the past four years, from the 2011 Euro debt crisis, the “fiscal cliff” drama of 2012 and the “taper tantrum” in 2013.
Professional investors commonly speak of putting certain complicated market calls as on the “too hard” pile. There is wisdom in knowing when one has no clear edge in figuring out a delicate investment situation. But the markets still open just about every weekday, and more often than not they sag into this vacuum.
Through a broad lens, it’s a net positive that the big money has taken cash off the table in favor of waiting. Conservative positioning usually is a buffer against nasty further declines, but comes with no guarantees. Those prior surges in money-market flows proved to be good buying opportunities for stocks and riskier bonds, for what that's worth.
Much of this indecision comes down to a nervous vigil ahead of what remains a toss-up call on whether the Fed will enter liftoff in September, or even December.
Yesterday’s muted reading on consumer inflation gave Janet Yellen little of the ammo she seems to seek...
(Excerpt) Read more at finance.yahoo.com ...
There's truth to Skypilot's first statement. The Fed decided in 2008 to prop up the markets at any price. The price we paid was bank consolidation as they all try to become too big to fail. The Fed propping up banks was particularly egregious, by buying mortgage and other loan securities they promoted yet another borrowing binge, although not very successfully. Promoting borrowing and penalizing saving is not a sustainable way to grow the economy, but don't tell the Fed, they won't listen. Ultimately that policy destroys wealth and the economy.
The second and even worse thing the Fed did was buy treasuries to allow the politicians to spend and increase the power and scope of the federal government. The declines in family stability and morality are traceable to the growth of centralized governemnt because the new bureaucrats suppress capitalism and support liberalism. The Fed has destroyed the country, voters now expect endless printing and spending. The question is whether this presages that the final collapse is imminent.
I kind of doubt the collapse is coming soon. It does not however justify "buy and hold" since such a shallow economy is built from fads, momentum (until it changes) and a general crowd mentality. If you are "buying and holding" funds, then you are probably part of the whole pump and dump racket. There are few funds that actually buy and hold. American exceptionalism is done, replaced by the free lunch mentality. What is left to hold onto? No, there is no reason to hold or presume a collapse. There is just the slow inevitable hollowing out of the American capitalist and entreprenurial spirit and slow decline into worldwide irrelevance. The dollar will eventually be sold off in spurts but even that is far in the future. We have nothing to fear but our own inevitable irrelevancy.
“When you are already on the floor, how far can you fall.”
We might be on the 92nd floor, so we maybe could fall 91 floors.
I occasionally joke but I seriously think strange things are going on in the world and domestic economies that aren’t discussed publicly. Why? Because insider investors want to quietly move their money out of harm’s way before the rest of us know what way harm’s way is. Also there are reputations to be preserved and power to be held onto.
Gold is the enemy of the Fed
It tells the truth about economic policies
( I think Volker said that)!
And so I hope you got out now to await the next cycle instead of riding all the way down again
You said it - and that is why I think this is coming again.
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Executive orders are not laws!
Only employees of the President (his “staff”) are bound in any way by them.
Only the congress can make such laws to have affect on the people.
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For the first time ever, I do not see ANYTHING worth investing in, for yield, growth, or security. The latest Chicom moves make the Fed can kicking exercise (QE addendum) more perilous. Buckle Up Folks.
I think you underestimate the intelligence of Freepers. Good posters provide information on financial leading indicators which may have impacts on the markets. Will there be another crash at some point? Of course. That is the cyclical nature of all financial markets. Good investors understand that, and take ALL the information in to make good sense for their exact situration.
Why was Greece bailed out at the last minute after all the BS about them not being key to the Euro economy? One word: derivatives. That house is teetering on total disaster and the first one to blink will trigger the crash.
Must be.
Which derivative would that be? They are not all bad or dangerous.
I hear despicable rumors of it creeping up on all of us ;)
I spent my career in the derivatives market...and I don't even know them all.
That said, what problematic derivative is involved in the Greek problem.
I'm asking because I don't know (but I don't have enough time to read every article that comes across my desk).
Want something to worry about?The head of the IMF Christine Lagarde is looking to establish a new currency to replace the dollar as the world’s reserve currency.We are so screwed if that ever happens.
Tell me who is self important.
You mad as hell all right.
What if everyone on FR responded to simple questions by providing links to a long articles. How long do you think the conversations would last?
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