Investors Deliver New Money into ‘Risk On’ Assets

Investors Deliver New Money into ‘Risk On’ Assets

Investors Deliver New Money into ‘Risk On’ Assets

$DIA, $SPY, $QQQ, $VXX

Investor appetite for risk on assets is set to make this by far the strongest year for inflows into stocks and corporate debt.

Record highs for global stock markets has seen demand for riskier assets surge this year. Inflows are up $534-B YTD, which is already almost 2X the prior record of $281-B set in Y 2013.

Over the past week investors delivered $8.9-B more into equities and $6.9-B into bonds, the EPFR data that runs from Wednesday to Wednesday shows.

Asset allocators are Bullish with equities at 60.7% of portfolios and cash allocations touching a new low at 10.2%.

The enthusiasm for risky assets has pushed Bank of America Merrill Lynch’s Bull & Bear indicator to elevated levels, at 7.6, such positioning is stretched ahead of potential catalysts for a sell-off.

Some strategists have been pushing back their predictions for a stock market correction as equities climb higher in a Bull market dubbed the “Icarus” trade.

 

US stocks have drawn in $13.4-B over the past 4 weeks as progress on tax reform plans fire interest in the market.

A global monetary tightening cycle led by the Fed could also send jitters through equity markets that has been buoyed by historically low bond yields.

Outflows from local currency emerging market debt and equity funds this week provided the 1st hint that higher Treasury yields could curb investors’ enthusiasm for high-yielding emerging market assets.

Emerging market debt has been 1 of the most popular asset classes this year, drawing the largest inflows along with financials and tech stocks.

Tech and Financials remain the best-performing US sectors, strategists said, and global tech one of the biggest inflow winners.

REITS (real estate investment trusts) and defensive sectors meanwhile have suffered outflows YTD as investors shun higher-yielding, safer stocks in favor of booming technology companies.

Monday, the major US stock market indexes finished at: DJIA -85.45 at 23348.74, NAS Comp -2.30 at 6698.95, S&P 500 -8.24 at 2572.83

Volume: Trade on the NYSE came in at: 871-M/shares exchanged.

  • NAS Comp +24.4% YTD
  • DJIA +18.2% YTD
  • S&P 500 +14.9% YTD
  • Russell 2000 +9.9% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Very Bullish (0.56) Very Bullish (0.64) Very Bullish (0.54) Very Bullish (0.50)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.41) Bullish (0.26) Very Bullish (0.54) Bullish (0.42)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Very Bullish (0.51) Bullish (0.49) Very Bullish (0.52) Very Bullish (0.53)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.42) Bearish (-0.29) Bearish (-0.40) Very Bearish (-0.58)

Stay tuned…

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