Bank of America: Overlooked Risks of Stagnation, Record High Inflows of Funds into US Stocks in a Single Week
A report from Bank of America shows that due to investors' lack of concern about stagflation risks, funds flowing into the US stock market have reached a historic high. As of the week ending March 13th, US stock funds received a total of $56 billion in inflows, with the majority going into the technology sector, reaching $6.8 billion. Despite the macro situation shifting from a golden-haired girl scenario to stagflation, the above situation is still occurring. Inflation rates in developed and emerging markets remain high, and cracks are finally appearing in the US labor market. According to information provided on the website, the economic data released in the US this week is mixed. February's PPI exceeded expectations, CPI is also rising rapidly, while initial and continuing jobless claims are lower than expected.
Zhitong App learned that a report from Bank of America shows that due to investors' lack of concern about stagflation risks, funds flowing into the U.S. stock market have reached a historic high.
According to Bank of America strategist Michael Hartnett, citing data from EPFR Global, as of the week ending March 13th, U.S. stock funds received a total of $56 billion in inflows. Among all sectors, the technology sector saw the highest inflow, reaching $6.8 billion, rebounding from the previous record outflow.
Hartnett mentioned that despite the macro situation transitioning from a golden-haired girl scenario to stagflation, the above situation is still occurring. Inflation rates remain high in developed and emerging markets, while the U.S. labor market is "finally showing cracks."
It is understood that the economic data released in the U.S. this week has been mixed. February's PPI exceeded expectations, CPI rose rapidly, and initial and continuing jobless claims were lower than expected.
Hartnett stated, "The new round of stagflation means that gold, commodities, cryptocurrencies, and cash will outperform other assets. The U.S. Treasury yield curve will steepen significantly, and there will be a clear tendency to sell defensive stocks and buy resources." He pointed out that so far this year, oil prices have outperformed the Nasdaq 100 index.
Stocks in the U.S. have risen this year because the market expects that the U.S. economy has fundamentally withstood the impact of monetary policy tightening, and the Federal Reserve will soon cut interest rates.
Barclays Bank strategist Emmanuel Cau wrote in a report that the stock market currently does not seem to be affected by rising inflation and softening economic activity data.
He said, "Given the current market pricing supported by the Federal Reserve's three rate cuts starting in June, investors continue to be optimistic about the soft landing scenario. If this becomes a reality, there is still plenty of cash available for investing in risk assets."