At some point, the liquidity that exists in a lot of pockets around the world will sniff opportunity and move into the markets, both debt and equity. And there is liquidity galore. As listed by J.P.Morgan and Jason Trennert of Strategas, the pockets include:
There are $5.7 trillion in money market funds around the world. Of that amount, $3.5 trillion is in the U.S. alone, and that $3.5 trillion is equal to 25% of the total equity capitalization of stocks in the U.S.
Private-equity funds have about $500 billion to invest.
Emerging-economy central banks grew reserves by $1.4 trillion in the last year. Most of that is from oil revenue, and some or much of it will get transferred to sovereign wealth funds, which look worldwide for opportunities.
Global savings accounts (as opposed to money market funds) have grown from $21 trillion in 2003 to $35 trillion this year.
Net credit balances in NYSE cash and margin accounts are over $150 billion. The prior peak before this surge was $50 billion in 2001. These balances bottomed at a debit of $125 billion in 2000 during the internet bubble.
Corporate America holds a 10-year high in cash on their balance sheets.
It would be nice if AIG (AIG - commentary - Cramer's Take) got past the crisis, and I vote for the Fed to extend a bridge loan. It would be nicer if there were behind-the-scenes moves to couple that with an equity investment by private-equity funds or some indications that there are buyers for some of AIG's assets.
P.S. Will you be there when Cramer makes his next move?
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Vincent Farrell Jr. is chief investment officer for Soleil Securities Group and a regular guest on CNBC and other national print and broadcast media.
Prior to joining Soleil in August 2008, Farrell was a principal of Scotsman Capital Management. Before that, he was chairman of Victory Capital Management of Cleveland and chairman of Victory SBSF Capital Management in New York. He was a founding partner of Spears Benzak Salomon & Farrell, which was acquired by KeyCorp in 1995. Vince held a variety of positions in his 23 years at SBSF, including chief investment officer, and he served as the portfolio manager on a number of the firm's largest client relationships.
Prior to joining SBSF, Vince spent nine years at Smith Barney as a vice president, sales.
Vince graduated from Princeton University in 1969 and received his MBA from the Iona College Graduate School of Business in 1972.
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