Bank of America Warns Calm Markets Are a Risk as Stock Funds Shed $14.2 Billion
MacroAnalyst
Bank of America strategists Jared Woodard and Michael Hartnett warned that investors and policymakers are being too relaxed about fast-building risks, with U.S. equity funds shedding $14.2 billion over the past three weeks, the largest outflow since January, according to BofA citing EPFR Global data. Global stock funds are now averaging $7 billion a week in outflows after pulling in $52 billion weekly as recently as July, while investment-grade bonds recorded a 23rd straight week of inflows at $5 billion and government and Treasury funds posted an 11th consecutive week of inflows at $6.6 billion. Technology sector funds took in $2.2 billion last week, leading all sectors, China equities saw their first inflow in six weeks at $1.1 billion, and materials funds extended a 10-week inflow streak at $1.9 billion. Woodard and Hartnett wrote that markets stop panicking when policymakers start panicking, but there is no panic anywhere despite the highest 30-year yield since June 2007 and spiking commodities, adding that blasé markets and bravado policy are a recipe for volatility. The strategists also flagged the AI spending debate, noting roughly $1.5 trillion has been invested in AI over the past three years with little evidence of economy-wide productivity gains, and warned that sometimes Main Street knows what Wall Street doesn't.
