If interested, here's the PIMCO opinion re the probability of a Fed raise/cut, a good article by Paul McCulley, a bit long and dry at the start, but well worth the read:
pimco.com
Some excerpts:
John Maynard Keynes: "A collapse in the price of equities, which has
had disastrous reactions on the marginal efficiency of capital, may
have been due to the weakening either of speculative confidence or of
the state of credit. But whereas the weakening of either is enough to
cause a collapse, recovery requires the revival of both. For whilst
the weakening of credit is sufficient to bring about a collapse, its
strengthening, though a necessary condition of recovery, is not a
sufficient condition."
McCulley: "There are many, many basis points of easing to come, as
time and credit market dynamics prove that liquidity is indeed a state
of mind, not some abstract measure of the money stock or pool of money
putatively on the sidelines, ready to be put to work. Liquidity is all
about the appetite of investors to assume risk with levered money and
the appetite of savers to provide such investors the leverage they seek."
Click also on footnote #3 at the end of this article for explanation of the "Plankton Effect" and the "Minsky Journey". McCulley's opinion would appear to imply a Fed cut induced market blow off top, concurrent with a big rise in the PMs as the $USDollar continues south. But will the PMs hold their value when the Fed finally runs out of gasoline to pour on the fire? Down the pike it may come time to listen for the tune of golden musical chairs???
NC ;o) |
