Business

The slow-motion wreck continues...

Unlike most other countries, the United States doesn't control drug prices. It leaves pricing up to the market. Which enables drug companies to charge as much as the market will bear. So what, exactly, did Martin Shkreli do wrong, by the standards of today's capitalism? He played the same game many others are playing on Wall Street and in corporate suites. He was just more audacious about it.

Submitted by Lance Roberts via RealInvestmentAdvice.com,

In this past weekend’s newsletter, I discussed the end of the mutual fund redemption period. (Charts updated through yesterday’s close.)

“Friday’s sell-off, combined with options expirations, pushed the markets back to short-term oversold conditions and at previous support.”

The first Fed rate hike in seven years was supposed to trigger a powerful equity rally as the bulls expected money to pour out of bonds into stocks; especially into the cyclicals.

The logic behind this market call was simple and seductive. History shows that the economy and earnings keep on accelerating as the Fed initially shifts away from monetary policy accommodation and history was expected to repeat itself. 

In the aftermath of the stunning liquidation and gating of first Third Avenue's junk bond mutual fund, and shortly thereafter several other fixed income hedge funds, investors have been following with great interest capital (out)flows from the fixed income space.