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Run for the Exits
Today early in the morning when the ‘smart money’, i.e., the big banks, investments banks, hedge funds and the like realized this was going to be a robust selloff in equities, they ran to the old staple of buying bonds hand over fist with little regard for the yield they are getting paid for stepping in front of the freight train of rate rises coming down the tracks.
FOMC Meeting & Press Conference
Just six days away from the most important FOMC meeting in the last seven years, another 300k employment report in the rear view mirror, and this looks like an excellent place to hide for nervous investors who have far more money than they have grains of common sense. Newsflash for these investors, yes markets are over-valued, and you need to get out of Apple, about 100 other high flying overpriced momentum stocks, but you can`t hide out in bonds this time, that party is over, and next Wednesday`s FOMC meeting is going to make this point abundantly clear.
Cash is King
There is no place to hide except cash, you should have thought about that before you gorged yourself on ZIRP to the point where you have pushed stocks and bonds to unsupportable price levels, and you keep begging for the Fed to stall just another six months, so you can continue to buy more stocks and bonds. Well you have done an excellent job hoodwinking the Fed to wait until June, you should thank your lucky stars you have done such a good job manipulating the Federal Reserve; but just like the boy crying wolf, this strategy loses its effectiveness over time.
So throwing another temper tantrum right before another important FOMC meeting hoping that Janet Yellen will be alarmed by these Pre-FOMC Selloffs, to put off another six months the inevitable rate hike, this blackmail strategy has run its course, and the Fed is forced to finally start the Rate Hiking Cycle after 7 plus years of Recession era Fed policies by an overheating labor market.
