The market can be thought of as a glass of water. The sides of the glass are asset classes, and the water is money.
Asset classes tend to cycle, which is like water sloshing from one side of the glass to another.
So that is why I am puzzled today: where did the water slosh to today?
The market recovered only 1.66% today. I use the adverb “only” because it is appropriate. Central banks the world over pledged to lend whatever amount to the ECB for the next three months.
That is very significant, and would have warranted a stronger equity recovery in my opinion.
In addition to the meek equity rally, Treasuries sagged and commodities (gold) got clobbered.
So if Thursday’s monetary intervention didn’t go into equities, treasuries, commodities, or real estate, what asset class did the money slosh to?
By default, it has to be cash. That is the only asset class left, yes?
I would like to speculate what this means, but this has been such an atypical day (from policy intervention, to the market reaction of that intervention) that I feel I am out of my league.
But it is fun speculating about nonetheless.
Why did the market shore up its cash balance?
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.