Going forward it will be more and more difficult to get your money out of the financial system. The reason for this concerns the actual structure of the financial system. As we've outlined previously, that structure is as follows: 1) The total currency (actual cash in the form of bills and coins) in the US financial system is a little over $1.36 trillion.
This morning both the NYSE broke (canceling all open orders) and China outlawed selling stocks for large investors. These two items seem completely unrelated… however, the reality is they are both based on a them we outlined back in May 2015. That theme is as follows: that as the next Crisis unfolds, it will more and more difficult to get your money out of the financial system.
Going forward it will be more and more difficult to get your money out of the financial system. The reason for this concerns the actual structure of the financial system. As I’ve outlined previously, that structure is as follows: 1) The total currency (actual cash in the form of bills and coins) in the US financial system is a little over $1.36 trillion.
Immediately after Lehman Brothers failed, a money market mutual fund called Reserve Primary "broke the buck"--it did not have enough money in its coffers to pay the shareholders what they'd had. Since money market funds are essentially used as bank accounts, this was a big problem--and it triggered a bank run on the money markets, which ended only when the government stepped in and said it would backstop these funds.
Flows into equities this month have been breaking all kinds of records, and they've spurred a lot of chatter about a "Great Rotation" out of fixed income funds and into equity funds as stocks climb higher.
While perhaps not quite as dramatic (or confusing) as last week's announcement by Scottrade that the discount online broker would no longer allow Canadian citizens to hold accounts, in a new surprising development, online broker Schwab has started informing some of its clients, mostly corporate and institutional, that "between June and October 2016, Schwab will update the cash feature on your account(s) from the current retail prime or municipal money market fund sweep to the Schwab Government Money Fund
One week ago we were surprised to learn that no matter what the market was doing, whether it was going up, down or sideways, Bank of America's "smart money" (institutional, private and hedge funds) clients, simply refused to buy anything, and in fact had continued to sell stocks for a near-record 12 consecutive weeks. In fact, the selling continued despite what we said, namely that "at this point it was about time for the selling to stock, if purely statisticall
JP Morgan’s Nikolaos Panigirtzoglou put a fascinating report out last week, looking at supply and demand in the global bond market in 2014. And although I consider myself something of a bond nerd, I was genuinely astonished by some of the charts he put together, starting with this one: