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Manulife, the big Canadian insurer (and investment) company, has advised fund managers to head into cash because stocks may plunge in the event U.S. Federal Reserve stimulus policies fall short of expectations.
Don Rich, vice president of tactical asset allocation for MFC Global Investment Management says:
“Fundamentals are bad and deteriorating and the market’s got ahead of itself,” “There’s really no place to hide. Just take as much money off the table as you can and sort of sit on the sidelines for a while.”
“The euphoria wears off. That’s the hangover I’m afraid we’re setting ourselves up for,”
"After the Fed launches the second round of quantitative easing, investors will realize it is a solution for the wrong problem". (Bloomberg)
“QE2 is a liquidity enhancer and worked the first time because we had a liquidity crisis,”
“The U.S. consumer’s balance sheet is a problem.
The structural problems on the European periphery are huge. There are several problems throughout the world, but right now, a liquidity crisis isn’t one of those problems.”
“There’s been little to no improvement in the labor front,” “That is ground zero of all the problems. In fact the numbers seem to be softening and not strengthening.”
“The European problems haven’t gone away, and they won’t go away,” “At some point Greece and some of the other periphery countries will have to restructure. So they’re going to be plagued by these structural problems for years, and it’s going to challenge the European unity.”
"... investors will know it’s time to get back into the market when they see Asian markets begin to rebound after the coming downturn". "More-volatile markets such as those of China, Taiwan and Singapore “tend to be first in and first out” of pullbacks, he said.
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