The headline in Bloomberg home page said it all:

Obama Stock Rally Persists on $3.5 Trillion in Money Market Fund Hoarding

As we have noted tine and again, this was neither an Obama sell off nor an Obama rally. Who the president is at any given moment is mostly irrelevant to the machinations of the markets. The sell off that began in late 2007 and bottomed in March 2009 was the culmination of years, perhaps decades of decisions made by traders, bankers, bureaucrats, pols, and others.

The article goes on to discuss another peeve of ours, the “Wall of cash” on the sidelines. By coincidence, this morning the WSJ also mentions the “wall of money.”

On Google, “wall of money” generates 13,200,000 responses; “wall of cash” finds 1,840,000 hits. “Cash on the sidelines” yields 459,000.

I’ll see if I can dig up a chart of Money market funds vs SPX later.

>

Previously:
Iowa and Prediction Markets (January 24th, 2004)

http://www.ritholtz.com/blog/2004/01/iowa-and-prediction-markets/

Confusing Cause & Effect: Elections and Markets (January 9th, 2008)

http://www.ritholtz.com/blog/2008/01/confusing-cause-effect-elections-and-markets/

Pricing in a Bush Presidency (July 8th, 2008)

http://www.ritholtz.com/blog/2008/07/pricing-in-a-bush-presidency/

Has the Market Fully Discounted the Bush Presidency ? (November 4th, 2008)

http://www.ritholtz.com/blog/2008/11/has-the-market-fully-discounted-the-bush-presidency/

Markets Are Rorschach Inkbot Tests (March 2, 2009)

http://www.ritholtz.com/blog/2009/03/markets-are-rorschach-inkbot-tests/

Was the ‘00-03 Crash Bush’s Fault? ‘09 Obama’s? (March 5th, 2009)

http://www.ritholtz.com/blog/2009/03/2000-crash-bush-09-obama/

Category: Markets, Politics

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

14 Responses to “Obama Rally?”

  1. dougc says:

    Transactions between entities of existing stocks or bonds doesn’t increase or decrease money market funds, only transactions involving new or secondary issues of securities . IPO’s tend to peak late in the market cycle, money market funds decrease and eventually the market falls due to some cause. It appears that markets rise and fall due to money market levels but it is not the cause .

  2. dead hobo says:

    BR quoted:

    • Obama Stock Rally Persists on $3.5 Trillion in Money Market Fund Hoarding

    reply:
    ———
    Oh to be a sales pundit and know about this. I wonder how many nearly drown by salivation on a frequent basis, just thinking about this stash? I especially like the quote from the Harris Bank geek who wants to blow another asset bubble with whatever can be peeled off. Bankers are dangerous people.

  3. Bruce in Tn says:

    http://www.cnbc.com/id/33053662

    Don’t Take Dollar’s Place for Granted: World Bank

    “World Bank President Robert Zoellick said the United States should not take the dollar’s status as the world’s key reserve currency for granted because other options are emerging.”

    I opined, from just looking at opinions and general grousing, that the dollar would lose its status in 24 months, about 2 months ago. Now it appears, that like tariffs, the dump the dollar movement is gathering steam. Obama rally? When this occurs, as Barry says, “look out below”…

  4. Marcus Aurelius says:

    I get a feeling that there’s a substantial portion of impending inflation locked up in those accounts. When that money starts circulating, we’ll witness the destruction of wealth on a scale not imagined.

    Time to head for the exit.

    Anyone in here seen an exit?

  5. Greg0658 says:

    just because there is money on the sidelines means a stock market rally in the making ? maybe the folks believed me when I said “make the corporations borrow from us .. where they have to pay it back .. with interest (small % anyway)

    it will be a natural end to the shenanigans (CEO pay, corp retreats, corp jets, etc etc etc) maybe even lobby power

  6. rww says:

    Annaly looks at cash on the sidelines as a “percent of total credit market debt” and its near a 50-year low.

    http://www.annaly.com/blog/?p=520

  7. tawm says:

    The market can climb a wall of Hope and Audicity to heights as yet unseen in this new (in)glorious age of our Savior!

  8. Onlooker from Troy says:

    rww

    That gets much closer to the truth and is the missing ingredient that is ignored or not known by these “cash on the sidelines” fools.

  9. Mannwich says:

    The “Ben & Tim’s Excellent Adventure Rally” is more like it.

  10. techy says:

    marcus..

    you should read a number of posts by Mish, i agree with him that inflation is not much of a risk without economic growth.

    short term inflation due to speculation/trade war/cartel decisions is definitely possible in commodities… but long term i believe you can only hoard so much….then what? if there is no consumption who will support those high prices?

    USD getting devalued is more worse for ROW, since they own majority of the $50 trillion(or more) of debt by USA. we will be happy to take 30% discount on that. and we will be then happy to print more and pay them those dollars.

    not to mention our export will get better….local manufacturing will be competitive compared to imports..

    If i was obama….i will be silently promoting investment in commodities (and stockpiling them like china).

    only problem is these things need to be done in a orderly fashion….china has been very smart in investing in commodities last 18 months, now only if they can give more disposable income to their citizens….and start local consumption, they wont have to send real stuff for paper $s.

  11. leftback says:

    “china has been very smart in investing in commodities last 18 months,”

    True, but here in the US we’re not very smart. We only invest in propping up diseased banks, house prices and other overvalued assets and banker bonuses, rather than clean energy, science and engineering . This society is rotten to the core, and we will not reach the bottom for a long time, until the Tyranny of the Incompetent comes to an end.

    Ask the Japanese.

  12. Moss says:

    Wait a minute.. I thought it was the Bush Boom and the Obama Bear market. I heard those very words out of the King dollar himself.

  13. WaltFrench says:

    I agree with your sentiment regards attributing rallies/collapses to the president, but “this time is different.” ;^>

    The market was plummeting following the failure of Lehman, the run on the money market funds and the imminent failure of the other banks and iBanks. A more “market solutions!!!” President would have discouraged his Treasury Secretary from joining Mr. Bernanke in the exceptional bailout that has ensued.

    Like it or hate it (I’m warily relieved), Administration policy gets a big chunk of the credit this time.

  14. Greg0658 says:

    continued from 9:54am
    “it will be a natural end to the shenanigans (CEO pay, corp retreats, corp jets, etc etc etc) maybe even lobby power”

    that cash empowerment allows a corporation: (so a short term* benefit is reaped for a shareholder via dividend)
    1st many times M&A (job losses by duplicate process dissolvement)
    2nd cheaper labor (break unions and go to 3rd worlds)
    3rd abandon in place old processes and structures /create new (maybe with a plan to pass onto another sucker**)

    once cash is invested in their corporate hands you are subject to their whims .. and may be stuck in there for some time via market fluctuations .. why we encourage/allow survival of the biggest fish .. when we are all little fish?

    * short term meaning – if the popultion does not die off of natural causes before the cutbacks are absorbed .. social services will need to be provided since we don’t allow euthanasia except by war in our culture

    ** a sucker looking to play against the big fish (may loose then dumping the stuff via bankruptcy or super fund cleanup)