CAUTION REIGNS
14 February 2010 by Cullen Roche
1 Comment
The latest from HRA Advisories:
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Comments
I agree with the central premise that “caution reigns.” But dismissing the notion of market manipulation by the Fed/Treasury, or their surrogates (GS, JPM?), is facile. While the Treasury does need to sell a huge amount of debt, the Govt also needs to restore and maintain confidence when the economic data indicates years of subpar growth and deleveraging. Allowing the collapse of the equity markets would undermine confidence and exaccerbate the baby boomer retirement problem by collapsing 401K/IRA values. So, the Fed/Treasury “game” is to see-saw the markets in a hypermanic manner to support confidence one week, then support Treasury auctions the next. Wash-rinse-repeat.