Equity funds continue to experience fund outflows as taxable bond funds enjoy fund inflows. (see table & chart below).
A modicum of sanity has crept into the equity markets insofar as Technology names are concerned. High multiple growth names that were driven primarily by speculation and momentum have finally started to pull back over the last few trading sessions along with most every other Technology name (the NASDAQ Composite is down 9.4% from September 2nd’s recent high of 12,053.09). Tech valuations in general are still not close to where we like them. In order for us to feel comfortable with Tech valuations they would need to retreat significantly. Some combination of a corporate tax increase and a halt to fiscal and monetary “COVID” stimulus would probably do the trick. We do not expect the Fed to tighten rates any time soon and believe the Fed is comfortable with a declining dollar (we are not). Don’t expect the Fed to stand by passively. Equity ETF purchases are next.
We would not be surprised if self-appointed monetary “fixer” Jay Powell and The Fed stepped in to purchase equities. Perhaps another 15-20% down move before Powell dons his cape in concert with BlackRock (to keep the transactions at arms length and to circumvent the need for re-writing the Federal Reserve Act of 1913), to save the day.



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