The Federal Open Market Committee meets again today to dispatch the latest wisdom on matters monetary. By and large, the market thinks that Fed funds will remain unchanged at 5.25%.
Doing nothing may seem to be the wisest choice at the moment, but no one should underestimate the complexity of the current global economic climate. One factor that’s skewing perceptions and modifying valuations is the mountain of cash looking for a home. There is an enormous amount of liquidity sloshing around, both domestically and in foreign economies. The magnitude of the liquidity is unprecedented, and so its impact on the capital markets and economic conditions are yet fully understood.
In light of the bull market in liquidity, the main questions for strategic-minded investors are: Is it really different this time? and if so, How’s it different?