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Advisor Group Chief Market Strategist Phil Blancato Provides Insight into Investing in Airbnb and Microsoft as Part of ‘Claman Countdown’
This week, investors took out cash at the fastest pace in more than a year and invested money in stocks, making bets that the Federal Reserve would continue to support markets.
Nearly $ 62 billion was withdrawn from treasury accounts during the week ended Wednesday, Bank of America said, citing EPFR data. Of that $ 51.2 billion was invested in stocks, $ 16.1 billion in bonds and $ 37 million in gold.
A record $ 28.3 billion was invested in large-cap U.S. equity funds, while tech stocks saw a 12th straight week of inflows of $ 3.2 trillion.
GUNDLACH, BILLION FUND MANAGER TAKES DOWN “TRANSITIONAL” INFLATION
There has been a “monster reallocation of liquidity to equities as the threat of fiscal redistribution recedes and the Fed is expected to remain pro-Wall Street,” wrote Bank of America strategists led by Michael Harnett. The company cited liquidity as the easiest since July 2007 – three months before the S&P 500 peaked before the Great Financial Crisis.
The Federal Reserve will hold its September policy meeting next week with economists who expect the central bank to set the course later this year by cutting its $ 120 billion per month in asset purchases.
The Fed “may signal – but not officially announce – that the reduction will begin later this year,” said Michael Pearce, senior US economist at research firm Capital Economics.
The tapered discussion moved to investor radars after Fed Chairman Jerome Powell said during his speech at the Jackson Hole Symposium last month that inflation at current levels is a “cause for concern. “.
Inflation concerns come as the labor market has shown signs of strengthening as the $ 300 per week extra unemployment benefit expires. Continuing jobless claims for the week ended September 4 fell to a pandemic low of 2.67 million. The report was published one day before the expiration of the additional benefits.
Powell said the tapering is not a “direct signal as to when interest rates are to take off,” leaving many investors to believe the stock market could continue to climb to record highs.
They continued to pump money into the stock market despite the fact that a number of Wall Street strategists recently sounded the alarm about the possibility of a stock market liquidation.
Bank of America’s Savita Subramanian warned earlier this month that the company’s internal indicator said sentiment was “almost euphoric” and closer to a sell signal than at any time since 2007.
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Morgan Stanley strategist Adam Sheets expressed similar concerns, noting that the next two months “carry disproportionate risk to growth, politics and the legislative agenda.”
The benchmark S&P 500, which gained 18% this year, spent 377 days without a 10% decline, the longest period since February 2016 to February 2018.
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