Thursday, May 20, 2010

Pimco - Why market is collapsing

Why market is collapsing

Bill Gross, the co-chief investment officer of Pimco and manager of the firm's Total Return Fund, told Reuters that "fiscal tightening momentum" is increasing in almost every corner of the world.

That comes as financial markets are exhibiting "a mini-relapse of a flight to liquidity as hedge funds and other leveraged positions are liquidated to preserve capital," Gross said.

Indeed, investors dumped everything, but Treasuries to raise cash. All major U.S. equity indexes dropped over 3 percent mid-Thursday while Treasuries rallied with the two-year note at only 0.7 percent.

Cash is still the King. :-)

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