A team of analysts at Bank of America led by Michael Hartnett released a report showing yet another financial bubble has emerged courtesy of the crisis in the banking sector.

According to Hartnett, money-market funds are the hot new asset.

(There are different types of Money Market Funds…Might want to bone up on what are the underlying assets supporting them… )

They point out money fund assets under management just hit a record $5.1 trillion, up over $300 billion over the past four weeks alone.

The last two times money-market fund assets surged, in 2008 and 2020, equity markets plunged, and the Federal Reserve was forced to slash interest rates to quell the panic.  (Reminder: The Federal Reserve brought this on themselves. They have a perfect track record of going too far in either direction until they break something…)

As Hartnett notes, “the markets stop panicking when central banks start panicking.”  (Chart from Bank of America)

Sources: Bloomberg; Bank of America; Sherman Co’s
“Material prepared by Sherman Sheets. My commentary is in bold.”

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