One interesting to note is that the amount of institutional and retail money market funds has been accumulating to record levels. These funds are now earning ultra-low interest rates. With more interest rates cuts on the way, the opportunity cost of not deploying these funds will increase. I mentioned in my earlier articles that this recession is a result of the lack-of-confidence of the integrity of the US financial system due to a series of events, tracing their beginnings to the sub prime crisis. Once the confidence is restored, the potential rise in the market can be explosive with US$300 billion of funds ready to be deployed.
No comments:
Post a Comment