Hedge Funds Borrow the Most Since 2007 to Purchase U.S. Stocks

The Federal Reserve has complete authority to monetize troubled assets and quantitatively ease, into perpetuity. As Denner mentioned, their actions over the last 3 years prove the extent of their resolve to do just that. Further, the US consumer is in recovery mode and financial balance sheets are stronger. That's not to say we couldn't get a 15% sell-off. But that if we did, it would not be supported by fundamentals, and swift intervention by Central Banks would result. You both are rather clueless. The Federal Reserve has total ability to reinflate prices, directly or indirectly, through discount window rates, prime rates, QE and TARP programs. That's exactly what caused the last 4 bubbles.

The original topic infers hedge fund margin levels are positively correlated to the likelihood of a market collapse. If the repo market spikes and institutional money is forced to liquidate to meet calls, the FED will step-in to avert a panic. That's what you're missing. The entire recovery was a ~6 Trillion dollar process of restoring faith in banks and markets. I see no evidence they want to throw that away.

 

Well perhaps I used the wrong wording saying 'complacency'. You are right, there was a fair bit of talk about banking problems, but no real fear or agreement that it could get really ugly amongst most traders.

I suppose what I meant was people thought a correction might come, but totally underestimated its potential magnitude, particularly in the financial stocks.

My point remains valid though, the sentiment is completely different now to then..

 

Looks like they want to push mkt higher into quarter end. Watch the euro . As it goes up so does mkt. I would think ounce QE2 is over market will correct down. I would not fight the long side though. There will be plenty of time to short them. The market will tell you. We are very close to year highs . Do they go theough or do we have lower high . Your guess is as good as mine

 

1% interest is dirt cheap. even at 4% is still cheap

dividends is 3% minimum p/e is 10-15

 

"The NYSE has released its monthly margin debt update for March. Not surprisingly, with everyone, and yes EVERYONE, chasing nothing but levered beta, margin debt surged to a fresh 3 year high at $315.7 billion, the highest since February 2008."

 

Never say never. This market is climbing a slippery slope.

 

Still a good idea even with the dollar's weakness? I believe now is no the time to play around with the dollar. They better make some good money out of it.