Subsidy plays still has legs, Fed's message about monetization
Plus highways' rally on earnings upgrades means that the subsidy play areas still have room to run or at least will stay resilient if the market pulls back. After looking at the price action and news of various subsidy plays, the subsidy theme still seems quite strong.
World markets have been selling down on the news that the Fed will not liquidate the assets acquired during the financial crisis. This would keep liquidity in the system at the current level.
The market would rather hear the Fed acquire more assets, unfortunately they put out mixed signals. The Fed indicated that they would not give new money and that it is basically in the government's hands to fiscally stimulate the economy. At the same time, they said they stand ready to help out when needed.
The market is looking for more direct monetary action. An individual has to look no further than the effect on the markets when the fed started acquiring mortgage assets in 2009. Anything less seems to be a disappointment.
Posts
2 comments:
Despite good earnings from tech companies this quarter, the market is still shaky and not confident with the future growth ahead.
Yes, if you haven't gotten in the subsidy names yet, now isn't a great time to buy. But you'll have to pick where you want to come in which is more dependent on market view.
On the other hand, if you had gotten in the subsidy related companies before the big rally (about 3 weeks ago), I don't think you should get out quite yet.
Post a Comment