Why are investors hoarding so much money? BlackRock's CEO Larry Fink weighed in on the question Tuesday: "I don't believe the people are sitting there because they're just worried about the next event. A lot of people just don't feel like investing has been that fair to them."
Blackrock knows about big numbers. It manages $5 trillion, which is higher than GDP of Japan. US GDP is about $15 trillion and China's about $10 trillion.
Bloomberg developed markets bond index yields have fallen from about 2% in 2011 & 2012 to about 0.5% in 2016.
Perhaps no extra income is better than the less-than-nothing promised by government bonds in Europe and Japan.
But cash is an unsustainable proposition for pensions, retirees, insurance companies and many others who expect to earn some sort of return on their assets.
This money is poised to rush in at the mere hint of a prolonged selloff, which means it will act as a buffer against just such a thing.
The amount of cash investors are holding could act as a safety net for falling markets. This money will come in when markets correct.
https://www.bloomberg.com/gadfly/articles/2016-10-19/-50-trillion-cash-safety-net-aches-for-a-market-fall
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