The Global Dash for Cash
Do you want to really know how terrified the investors crowds are just now?
Check out this chart (below) from Dr Ed Yardeni that shows the "dash for cash demand" as the recent weeks of panic have unfolded.
I’ve circled 2008-2009 to give you a sense of comparable levels and depth of emotional distress.
Have a look at how much cash folks are looking for:
And the Really Scary Part?
We’re now getting a sense that we have a low and very likely could have already seen the top of the new trade range recently, which we can now use as a semblance of judgement.
That perspective allows us a sense of how capital flows will begin to support the lower ends of this range - in preparation for beating this thing.
The Risk is to the Upside?
Make no mistake...nearly everyone will tell you that you’re a complete moron if you do not recognize that we are, for sure, going to test lows, break the lows and the real pain is still ahead.
They’ll also likely share with you their belief about how long it will take us to recover from this crisis.
There is, however, only one minor problem with the eternal Armageddon argument: Markets do not do what "everyone thinks is logical." Period.
Forces at Work
People make markets.
The recovery from this process cannot be specifically defined right this moment.
But I would like us to all consider this thought: Emotional energy drives markets short-term, while demographics drive the underlying current long-term.
We are well set for the latter.
As for the former point, the odds are high the surprise that will trigger the speedier-than-expected recovery will come out of left field, just like the bat out of hell did that launched this black swan.