And now we have Uncle Sam Inc. to the rescue, bailing out yet again, a flawed and leveraged capital market. The US central bank will expand its balance sheet to over $11 trillion (i.e. $11,000,000,000,000) in a few weeks’ time. The “independent” Federal Reserve is now very dependent on Congress to lever its balance sheet and buy whatever it wants, even junk bonds and Exchange Traded Funds (ETF’s).
- Valuations matter and are only back to fair value in our view
- This will be a long workout
- Attractive stressed opportunities will present themselves
- There is little transparency of future earnings
- Remain diversified, patient and liquid