There are big cracks in a $7 trillion bull case for stocks to keep rising

• The Saudis strategists often cite a price of $ 6.9 trillion of money market funds as a potential fuel for shares.

• But the increase in money market funds may not be because investors are waiting for accumulation in stocks.

• The potential DIP buyers do not see any deals so far as the stock market has decreased on economic growth concerns.

The Wall Street strategy indicated last year to Major The shares are likely to continue to pay a higher: Mount of money on the margin.

There is a record record of $ 6.9 trillion of money market funds, according to data from Bank of America. The theory says that once the stock market sees a convincing decrease, investors will rush, Publish their money And prevent any slowdown from getting out of control.

The idea gained Steam in September when the federal reserve began to reduce interest rates, making criticism a little less attractive. Hope was that with the low return on the safest assets, investors were flowing to the stock market and moving a new set of gains.

But if the bulls depend on “Wall of Money” To save the stock market during the following large sales, they may make their thinking.

This is the reason.

The problem with this bull thesis is that a lot of assets in the money market funds are driven by decisions to improve money between investors, according to Jay Philseld, CEO of Infrastructure Capital Adviss.

“During the increase in the money market assets, the M1 level, which included checking the accounts, but not the funds of the money market, decreased by more than $ 2 trillion, indicating that the increase in the balance of the money market was mostly the improvement activity and not the activity of reducing risk,” said Philsel Bi.

In other words, investors have benefited from 5 % of cash returns by transferring their money from low -yielding bank accounts and converting them into money market funds.

As long as the monetary returns are not disrupted to zero, it is unlikely that the money on the margin will strive for other investment opportunities.

Even if the returns stumbled on 0 %, this may mean that the economy is in trouble, and in this case, investors may not be keen to transfer their risk -free money to more volatile assets like stocks.

According to Larry Tentarelli, the chief technical strategy in the Blue Chip Daily Trend report, the record $ 7 trillion cash is not all this impressive amount, at least on a relative basis.

A data analysis by Tentarelli showed that the money market money has decreased steadily as a percentage of the total market value in the S&P 500, even with the absolute number of records.

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