In this week's Off the Cuff podcast, Chris and Brian Pretti discuss:
- Japan's Halloween Massacre
- The most glaring sign yet that the central banks are desperate
- Capital Flows Are King Right Now
- The reason we have record-high markets despite crummy fundamentals
- Musical Chairs
- Every (market) player has fun until the music stops
- Throwing The Bums Out
- As our lifestyles contract, we vote out the incumbents
If you're scratching your head at the elevated prices in today's markets, especially in the US, look to where global capital is flowing.
The central banks have colluded to give money little other chance but to go into favored assets like stocks and real estate. Money in bank accounts earns nothing (in fact, real interest rates are negative). Bonds yield practically nothing. So, investors seeking return are forced to speculate.
And given the depressed growth outlook for Europe, the mad experiment being conducted in Japan, the reckless policies in South America, and the lit powderkeg that is China, spooked investors around the world are sending their capital to the US. Which raises prices. And that price appreciation attracts more return-hungry investors.
Never mind that America's fundamentals are pretty noxious right now, too. To the world, it's the lesser of evils; which on a relative basis, makes it the most attractive.
by spad