Editor’s note: this video and commentary is for 4/15/2020
Markets in the US, led my Amazon (AMZN) and Netflix (NFLX), are performing well and we’re not seeing selloffs in reaction to bad news, which shows the Fed’s support is making a positive impact, Ed Harrison and Roger Hirst said during today’s Real Vision Daily Briefing.
One drawback to this is that the Fed bidding up assets has put an artificial floor under them, which has made price discovery in US markets virtually impossible. Harrison and Hirst said that the place to look for price discovery in the global market is FX markets and emerging market bonds.
They argued that the more the Fed does, the more attractive the US becomes because investors want to buy what the Fed is buying. If investors think all assets in the US are backed by the Fed with unlimited QE, they’ll buy those assets and not emerging markets, which can’t back their own economies.
Because of the scale of what is happening, Harrison and Hirst said that in some ways the world is looking at the Fed to bail them out, but that the Fed will have to draw a line in the sand; they may have opened swap lines, but they won’t bail out the world’s corporates.
In the US, Harrison and Hirst said the Fed’s line will likely be drawn “somewhere in the high yield, equity, leveraged loan universe.” Harrison mentioned lower grade US high yield and the Russell 2000.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: This is pretty obvious, but we should probably say it anyway so that there is absolutely no confusion… The material in REAL VISION GROUP video programs and publications (collectively referred to as “RV RELEASES”) is provided for informational purposes only and is NOT investment advice. The information in RV RELEASES has been obtained from sources believed to be reliable, but Real Vision and its contributors, distributors and/or publishers, licensors, and their respective employees, contractors, agents, suppliers and vendors(collectively,”Affiliated Parties”) make no representation or warranty as to the accuracy, timeliness or completeness of the content in RV RELEASES. Any data included in RV RELEASES are illustrative only and not for investment purposes. Any opinion or recommendation expressed in RV RELEASES is subject to change without notice. RV Releases do not recommend, explicitly nor implicitly, nor suggest or recommend any investment strategy. Real Vision Group and its Affiliated Parties disclaim all liability for any loss that may arise(whether direct, indirect, consequential, incidental, punitive or otherwise) from any use of the information in RV RELEASES. Real Vision Group and its Affiliated Parties do not have regard to any individual’s, group of individuals’ or entity’s specific investment objectives, financial situation or circumstances. RV Releases do not express any opinion on the future value of any security, currency or other investment instrument. You should seek expert financial and other advice regarding the appropriateness of the material discussed or recommended in RV RELEASES and should note that investment values may fall, you may receive back less than originally invested and past performance is not necessarily reflective of future performance.Well that was pretty intense! We hope you got all of that – now stop reading the small print and go and enjoy Real Vision.
Be the first to comment