A World Awash in Cash, Means What?

If you're an investor where do you park your money these days? Treasury bonds? Cash? Equities? Gold? Oil? Ladies and gentlemen, pick your poison because there are no clear bets unless you are solely trying to preserve principal. Of course, cash comes to mind. (Who knows, some banks soon may start charging depositors to park their money there.) One analyst told us the other day that commercial banks are sitting on roughly $1.6 trillion (yes trillion) in excess reserves or what he calls “lendable deposits.” He figures that this will spur banks to originate jumbo loans and keep the notes on their books instead of selling them into the secondary market. As for Treasuries, fear is driving bond purchases which means mortgage rates (likely) are headed in one direction: south. Now if only the job market would pick up…