The following is an excerpt from Pivotal Events published for our subscribers October 19, 2017.
The headline about the cost of not being fully invested was from the manager at JP Morgan Asset Management who added "I've never been so optimistic about the global economy."
We are still disturbed by last week's observation from a very big money manager that the main risk is "policy error" by the Fed. This could be based upon 2007, when there was adamant conviction that the Fed, in making the perfectly-timed "cut" in the administered rate, could keep the mania going. One conclusion could be that the Fed's timing was not perfect and was an "error". The more practical observation is that the T-bill rate always plunges during a post-bubble collapse and the Fed rate follows the market rate of interest. Down.
T-bill rates, or equivalent increase in a boom and decrease in the consequent contraction.
And then there is the comment about creating new kinds of financial instruments. Which is a sign of speculation, but we do not know of any "alarm bells" at the Fed. Wild, but ephemeral financial instruments have been created with every great bubble since the first one in 1720.