|Between Doom And Gloom Predictions And Investors' Flight To Fixed Income, Equity Markets Are Full Of Negative Sentiment|
|Friday, May 11, 2012 15:37|
There’s plenty of negative sentiment in the equity marketplace. One analyst bases a scenario tied to a third Fed easing, saying the markets will have difficulty resuming an upward trajectory with any sustainability if the Fed does not act a third (actually, a fourth when you include Operation Twist) time.
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Marc Faber predicts a 1987 style market crash if a third easing is not enacted to support the upward move. He feels that such a rally would be narrow and involve only a few participants rather than the broader market.
He extended his dire predictions to the next 10 years. There is plenty of negative sentiment in the marketplace. And sometimes, markets love to climb a wall of worry. Meanwhile, investors are pouring assets into fixed income mutual funds, just at a time when yields are historic lows and interest rates could be overdue for a rise. Some analysts are going so far as to say funds should close their doors because the loss of principal as yields go up will be hard for investors to weather.