The contrarian market and liquidity glut

http://www.zerohedge.com/article/contrarian-market-and-liquidity-glut-dissected

“I can’t think of a reason to be bullish...so I guess that is the reason to be bullish.” That quote from a client at our June 30th credit roundtable dinner in our view best summarized investor sentiment at the beginning of July. It also highlighted a key technical reason to have been bullish in July as negative investor sentiment reached a peak at the beginning of the month."

“I want to say one word to you. Just one word.” Not “plastics” but “liquidity”. Our longer term positive outlook on credit relies significantly on the technical condition of excess liquidity in financial markets. While eventually economic and credit fundamentals will need to catch up to those technicals to justify a continuation of spread compression (and credit market overweights), for now our year end outlook maintains that positive liquidity trends will lead to compression in spreads recouping much if not all of the European sovereign crisis induced spread widening.

In other words ignore fundamentals, ignore technicals, ignore everything you know about asset allocation and selection, and put your financial well being in the hands of the same people (the Fed) who have time after time proven the be the biggest wealth destructors of the US middle class year after year (unless of course one is a member of the privileged kleptocracy, in which case there is nothing to worry about).