This is a financially engineered market,said Michael Crofton,President and CEO of The Philadelphia Trust Company,engineered by central banks.Bonds and commodities are telling us that stocks are too high,and there could be a crash.
The pullback will come from a macro-event that will surprise everyone.The Federal Reserve won't be able to do much more to help.Those high points of similar markets in the past coincided with the peak of financial engineering.
We rotated out of consumer staples in March and into underperforming energy and technology.The rise of staples had been unsustainable.You just keep rotating,and when the music stops,you'd better hope you're sitting down.
The Philadelphia Trust is an independent private bank serving affluent investors and institutions.The company says it brings old-fashioned values such as attention and discretion into the post-modern world.It offers a full range of services,from custody and trading to income distribution,CDs and scheduled client reviews.
In equity investing,the Trust strictly adheres to the growth at a reasonable price discipline.
On Wednesday,the Federal Reserve said it would continue its quantitative easing policy of bond-buying to keep interest rates low,in effect driving investors more into equities.
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