Hmmmm........ Ok.. I think... :0)
I didn't want to make this too complex, except to say that what the govt statisticians are referring to as savings, and what actually constitute savings are two different animals.
People are putting their money, not so much directly into stocks, but in the hands of money managers, both private and mutual funds. These managers then increase or decrease their market exposure and cash levels appropriately (we hope).
So if mutual funds are currently sitting on 4.8% cash on average (according to IBD's tables), shouldn't that also be included as cash savings by Americans?
Using traditional models of what are termed "liquid assets", the US savings rate is low. However, since Americans know that they have only to call their brokerage or mutual fund, cash out the appropriate amount of stock, and have a check cut and sent to them, they probably constitute this as savings. (I do... :0)
Now having this expectation of liquidity in our investment accounts may probably come back and bite us all in the butt one of these days, but I'm sure we'll have some measure of warning. If not, then I suspect that such an event would have a negative effect across ALL markets, not just the US.
Regards,
Ron |
