Huge Cash Pile Still on the Sidelines

Huge Cash Pile Still on the Sidelines

$DIA, $SPY, $QQQ, $RUTX, $VXX

FLASH: The majority of wealthy American investors are optimistic about US stocks, but are still sitting huge piles of cash, according to a UBS Group AG survey.

That positive outlook holds with 57% of the survey’s US respondents.

The survey, conducted in March, targeted investors with at least $1-M in investable assets. Tempering that sentiment were the 29% who described their outlook on U.S equities as Neutral, and 14% who said they were pessimistic.

The percentage of optimists is roughly even with the reading for Q-4 of Y 2018, which was taken in November as stocks were falling. Then, fewer investors described themselves as Neutral and more said they were pessimistic.

A majority of US investors also expressed optimism about the economy, at 56%. They were less sanguine on the global outlook; 37% said they were optimistic, 32% Neutral and 31% pessimistic.

While 26% of US investors said they plan to invest more in the next 6 months, they currently have an average of 23% in cash. Their biggest worries at the time of the survey were the political environment, followed by the national debt and healthcare costs.

Investors who reacted to the Fed induces market dive by moving into cash “are probably unhappy they gave up gains in Q-1 of this year,” said the head of investment platforms and solutions for UBS wealth management in the Americas. “Our clients felt they lost time and energy in the 1st months of the year worrying, and want to be reinvested as quickly as possible.”

The survey, also sampled attitudes in 16 other world markets, found just over 50% of global investors optimistic about the world economic outlook, and 21% pessimistic.

Cash makes up a big part of global retail portfolios, at 32%, and the highest proportions were in Asia and Latin America, at 36%, UBS said.

The Top concerns among global investors were “my country’s politics” at 44%, and the national debt and cyber-security, both cited by 40% of respondents.

The global trade disputes were the leading concern in Asia and the 3rd-most pressing investor worry in Europe, sans Switzerland.

Cyber-security ranked 2nd among risks weighing on the minds of European investors. Switzerland, where UBS is HQ’d, was the only region to cite data privacy as a Top 3 concern.

A majority of investors around the world remain concerned about volatility after last year’s uptick, the report said. ‘People have latent concerns about volatility, but also look at the rise in volatility as an opportunity to engage,’ said the chief investment officer for the Americas at UBS Global Wealth Management.

Tuesday’s trading was largely defensive, evidenced by a flight-to-safety in US Treasuries, firmness in the USD, and a spike in the CBOE Volatility Index (VIX 20.94, +5.50, +35.1%). The move in the VIX reflected interest in hedging against further Southside action.

Stay tuned…

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