20DMF

[Pascal]

Market is still strong, with slow continuous accumulation.
It is as if the S&P500 was acting like a bond: both European and Japanese pension funds are looking for "safe" assets that offer some yield.... simply because if they do not produce yield, they cannot even cover their running costs.

This also means that upon exhaustion, such a move can be easily hit by an air pocket.


Pascal

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36492

[PeterR]

It is as if the S&P500 was acting like a bond: both European and Japanese pension funds are looking for "safe" assets that offer some yield.... simply because if they do not produce yield, they cannot even cover their running costs.


Very true Pascal!

This is my major investment hypothesis since I realized this 2-3 years ago.

I don't see any reason for this to end.

Besides the money from outside US flowing in, the same is true inside US.

In the US: pension funds have the same troubles.
They need a yield of about 4% to survive according to some blogs. I assume real yield.
Only in equities can they get this.

This also explains the "rolling heads" and mergers in the bond industry (e.g. PIMCO).
These guys also pressure the FED to raise rates to survive.
The dialog with this interest group explains 50% of the FED talk IMO.

This headline of today shows, that Japan's JGB market is most likely dead:
http://asia.nikkei.com/Markets/Capital-Markets/BTMU-plans-to-quit-as-a-primary-dealer-of-Japanese-bonds

The government sells and buys with them-self.
The private sector moves somewhere else.

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One other theme is the under-reported banking crisis in Italy and Germany ( insert Europe cynicism here :) )
Here is my news log about it. I try to track it.

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And I monitor this to gauge systemic risk in europe:
http://stockcharts.com/h-sc/ui?s=DB%3A%24STOX5E&p=D&yr=1&mn=0&dy=0&id=p66573851482
(DB is an ADR in USD and Euro Stoxx is in EUR - but close enough I hope)

CDS:
http://www.boursorama.com/bourse/taux/cds-CDS_5A_DEUTSCHE_BANK-3xDB
http://www.boursorama.com/bourse/taux/cds-CDS_5A_UNICREDIT-3xUSPA



This too drives money into US IMO.