MarketWatch on $6 Trillion Pile of Cash
MarketWatch published, "Why this $6 trillion pile of cash isn't heading for stocks any time soon." It explains, "Even with U.S. stocks in a new bull market, investors aren't showing many signs of backing away from money-market funds and other cash-like investments offering yields of about 5%, the highest in about 15 years. Money-market funds hit a record of $5.9 trillion in assets as of Tuesday, signaling a continuing drain out of bank deposits into higher-yielding 'cash-like' investments, according to Peter Crane, president and publisher of Crane Data. He expects the tally soon to eclipse $6 trillion and then to stay elevated, even though money-market assets already grew almost 18% in May from a year ago. 'It's clear that bank deposits have sprung a leak,' Crane said, pointing to regional bank failures in March that spooked depositors and money-market funds recently offering yields closer to historical averages." The article continues, "While the Federal Reserve's interest rate rises may have created carnage in stocks and bonds last year, it also set up money-market funds to quickly reflect higher yields associated with the central bank's monetary tightening cycle to combat inflation.... Talking about the 'Wall of cash' it goes on to say, 'With the S&P 500 index qualifying for an exit from its longest bear-market stretch since 1948, it's logical to ask if investors clinging to a mountain of cash are being too conservative <b:>`_.... Michael Rosen, co-founder and chief investment officer of Angeles Investments, which advises endowments, foundations and private pension funds, still thinks a lot of cash on the sidelines and sustained bearishness about stocks could be a signal to move into stocks. 'You get maximum bearishness near the bottom on the market and maximum bullishness at top of the market,' Rosen said." MarketWatch adds, "But Crane, a 30-year veteran of the money-market world, doesn't expect bulls touting the 'wall of cash on the sidelines' to result in flows into equities. 'There's no correlation to assets in money funds and the stock-market,' he said, adding that instead institutional players like corporations mostly use money-market funds to deal with their cash balances. 'Saying that all of the sudden investors are going to get tired of 5% yields is a stretch,' Crane said."
