Levkovich says members of the S&P 500, excluding financials, "are sitting on roughly $800 billion of cash, indicating a widespread lack of need for bank loans." He added that the biggest U.S. companies "control more cash than others and consequently, any renewed liquidity fears also support our large-cap bias."
After all, Levkovich pointed out, the Federal Reserve and other central banks have been right there, acting swiftly via cash infusions to steady the markets, particularly the commercial paper area. What’s more, Levkovich says the news about hedge going bust or prohibiting investors from withdrawing cash are going overboard, spreading excessive fear. According to him, the hedge funds in the news do not comprise a majority of the funds in that investment category, and will likely have a small impact on markets overall.
The strategist concluded, "Recent events do not seem to warrant the kind of mournful whining that we have been monitoring; volatility has stepped up, as we expected, and it has caused disruption, but we do not think it will cause a bear market.”