Not everyone is irrationally exuberant.
Why would this bullishness extend to practically the entire globe?
With fundamentals and economic realities having become totally irrelevant these days, economists are reassigned to tout stocks.
“Here’s when US equity and bond markets will change direction: when investors come to fear the next Fed-talk.”
Over the long run (which is now), the math of that distortion just doesn’t work out.
The report – released on Friday when everyone was on vacation or getting ready to head out of town, and when no one was supposed to pay attention – was a zinger: US net capital outflows soared to $153.5 billion, the largest ever recorded.
Investors won’t even know what exactly is in the pool.
The good folks with more than $10,000 in the market have spoken.
They’d piled into the new “risk sharing RMBS bonds” issued by Fannie and Freddie. Wall Street provided 80% leverage. Buying frenzy ensued. But it didn’t last long.
Junk bond investors are running for the hills. But there are no hills.