Valuewalk.com
0
All posts from Valuewalk.com
Valuewalk.com in Valuewalk.com,

PIMCO Links Fed, China, Commodity Deflation & Market Concerns

Noting that scientist Ivan Pavlov trained dogs to salivate in anticipation of receiving a tasty reward, Pavolv’s experiments translate into the current market environment, a recent PIMCO strategy note observed. Investors have become trained to react negatively simply at the anticipation of a Fed rate hike, and the Fed is accomplishing a task that hasn't been successfully executed in the postwar era, they note.

PIMCO 9 29 CRB

PIMCO: Fed is eliciting typical Pavlovian response, causing markets to shudder at the thought of a rate hike

“In 2015, market volatility has been rooted in a phantom rate hike from the Federal Reserve, which throughout the year has been ringing a bell to warn markets that it is on the verge of raising interest rates for the first time since 2006,” PIMCO’s market strategist Tony Crescenzi wrote in a note to investors. “Though it hasn’t happened, the Fed has elicited a typical Pavlovian response, causing markets to shudder at the thought and prompting a very significant chain of events that has rippled throughout global financial markets.”

Crescenzi says that the Fed’s much anticipated rate hike isn’t the cause of market volatility, but notes that it has been a catalyst. Crescenzi says the most...


More