Market Overview

Cash Is Outperforming Stocks And Bonds For The First Time Since 1990

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Cash Is Outperforming Stocks And Bonds For The First Time Since 1990
  • Michael Hartnett, Bank of America's Chief Investment Strategist, stated that cash is outperforming stocks and bonds for the first time since 1990.
  • Hartnett's "Bull & Bear Index" is now the most bearish since October 2011.
  • Hartnett also noted the "Global Wealth and Investment Management Risk Appetite Index" is "marginally in risk-on territory."

Michael Hartnett, Bank of America's Chief Investment Strategist commented in a note that "cash is king" as cash has outperformed both stocks and bonds this year for the first time since 1990.

Weekly Flows

Hartnett observed the following cash flows:

  • Equities: $3.3 billion total outflows ($2.9 billion ETF outflows, $0.4 billion mutual fund outflows). A "tiny" $95 million outflow was observed in emerging market equities, European equities saw a $2.96 billion inflow while domestically, U.S. equities saw a $7.3 billion outflow (note: SPY alone accounted for $7.4 billion in outflows).
  • Bonds: $0.4 billion inflow – marking the first week of inflows after six consecutive weeks of outflows.
  • Money-markets: $17 billion inflow – the largest inflow figure in four weeks.
  • Precious Metals: $0.1 billion outflow – fourth straight week of "modest" outflows.

Bull & Bear Index Most Bearish Since 2011

Hartnett also pointed out that his proprietary Bank of America Bull & Bear Index is now reading the most bearish level ever since October 2011 with a reading of just 0.1. The index factors in cross-asset flows, positioning, and technical analysis on a 0-10 scale with 0 being "extreme bearish," 5.0 being "Neutral" and 10 being "extreme bullish."

Finally, Hartnett also stated that his "Global Wealth and Investment Management Risk Appetite Index" is "marginally in risk-on territory.

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