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Bullish strategies often cite a record $ 6.9 trillion in funds on the money market as a potential fuel for shares.
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But the money raising in cash may not be because investors are waiting for them to pile up in stock.
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Potential Customers of the DIP still do not see any offers because the stock market decreases because of the care of fading economic growth.
Strategies on Wall Street in the last year have pointed to A key reason Stocks are likely to continue to push more: Gotovina Mountain to the side.
According to data from the bank of America, there are a record $ 6.9 trillion in money market funds. Theory says that as soon as the stock market sees a convincing fall, investors will hurry up, arranging your money and preventing any decline to get out of control spirally.
The idea gained money in September when federal reserves began to reduce interest rates, which is a slightly less attractive keeping. She hoped that yields on a safer property would be reduced, investors would return to the stock market and encourage a fresh series of gains.
But if bulls count “Wall of money” In order to save the stock market during the next big sale, they could adjust their thinking.
Here’s why.
The problem with this BIF’s thesis is that much of the increase in property in the money markets is initiated by the decision to optimize Gotovina among investors, according to Jay Hatfield, the Capital Advisors Infrastructure CEO.
“During the period of increasing property on the money market, the level of M1, which included account checks but not the property of the money market, decreased by over $ 2 trillion, indicating that increasing the balance of money markets is generally optimization activity, not the activity of reducing risks,” Hatfield would.
In other words, investors used 5% of cash yields by transferring their money from low-private bank accounts and transferring it to funds on the money market.
Until cash yields are demolished to zero, it is unlikely that Gotovina will look for other investment options on the side.
Even if the yields have fallen to 0%, it probably means that the economy is in trouble, in this case investors are unlikely to be eager to move their money without risk to a more unstable property like shares.
According to Larry Tentarelli, the main technical strategist in a Blue Chip Daily trend report, a record $ 7 trillion dollars in cash is not such an impressive amount, at least relative.
Tentarelli’s data analysis has shown that money in the money market is constantly declining as a percentage of the total market capitalization of the S&P 500, even if the absolute number has hit the record.
