Investors yank billions out of market following Trump's tax bill win
I found this interesting, I thought that it should be discussed here.
As Congress moved the tax bill forward, investors pulled the highest amount out of equities funds in more than three years, suggesting some investors may see "tax cuts" as already priced in.
According to Bank of America Merrill Lynch, redemptions from equities funds and ETFs totaled $14.5 billion, the fourth largest on record, and the biggest since August, 2014, just weeks after Brexit.
For the week ending Wednesday, redemptions from bond funds overall totaled $3.2 billion, the largest in a year. High-yield bond funds were down $5.3 billion, the eighth consecutive week of outflows and the longest streak since the financial crisis in 2008.
"I think the reaction was notable this week, after the tax reform passage. The outflows were remarkable," said Jared Woodard, global market strategist at BofA. Woodard said investors sold value, small caps, and financials, all "Trump trade" sectors that should benefit from the sweeping tax bill.
U.S. value funds had outflows of $7.8 billion and small caps lost $5.8 billion, both the largest on record.
"It was exactly the kind of places where you saw big inflows after the U.S. election," he said. Woodard doesn't believe the "buy the rumor, sell the news" behavior is negative for stocks near term, and the market should benefit from "risk on" in January. What it may be a sign of is that investors do not see the big returns some expect from the tax stimulus, Woodard said.
But nonetheless, Woodard said momentum is positive for the stock market for now. One area that saw inflows was tech, which is a sector not expected to see much benefit from the sharp decline in the corporate tax rate to 21 percent from 35 percent.
BofA's bull bear indicator has moved further away from the sell signal level of 8, and was at 6.1 on weaker high yield flows and less bullish hedge fund positioning.
Investment grade corporates bonds saw inflows of $1.2 billion, the 52 positive week.
Congress voted on the tax bill Wednesday, and it was signed by President Donald Trump Friday.
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Something like this occurred during the Bush presidency just before the big crash, this looks very similar to what I saw when I told my friends to get the F out of the market then.
I don't think the banks are still writing the same bad paper which caused the crash... just sayin
No, I think it is new bad paper. As I said below, I hope I'm wrong.
if they wrote new bad paper.... do you think trump will bail them out?
my bet is not only will he not bail them out he will probably put them in jail.
have you seen this? done the same time as the tax bill and possibly why the sudden cash grab...
regardless why... something big this way comes... that is a fact.
I wonder if that includes Trump and, his family and, cabinet. It seems to me, his private organization holds more property in foreign lands that deal in the kind of human rights violations which he speaks of in that EO. Or, is this just an attempt to get his "enemy's" out of the way.
the NWO or liberal world order as obama called it, is our enemy, is very corrupt and must be pulled up by the roots or it will return.
people like soros know exactly what the EO is for and if the banksters fuk with our economy? they will pay this time around.
Ahhh, so, people like Ailes and, the Koch's are OK then? Seems to me they are doing exactly the same thing, the only difference is they support Trump with their money.
and that is probably where it all went bad.
trump passes tax bill to benefit himself then writes an EO to go after himself? really? OMG simply way to funny
wake up:
trump+keeps+promise+thousands+pedophile+arrests+since+trump
just another promise kept... and now "the Donald" is going after the likes of soros.
maybe I will be tired of winning after that? haha... nope
only time will tell... regardless, should be one heck of a show
Somehow, I don't see it that way, if it is intended to get rid of Trumps "enemy's" then it is nothing more than a totalitarian move on his part.
So, why are Moore and, Trump still running around? Seems to me they missed a couple.
Funny like a root canal, Trump doesn't consider himself a criminal even though it is proven fact that he had dealings with the mob and, quite possibly laundered money for the Russians. He doesn't consider one of his foreign business partners a human rights violator because he does business with him but, he is a human rights violator. Trump likes to point the finger at everyone else but, forgets that he is even more guilty than they are. Claiming someone is a criminal is easy, especially when you can change the rules and, manufacture evidence to prove they are.
not as easy as one might suggest.
how are those impeachment proceedings going? not too well huh?
manufacturing evidence is not as easy as the super fbi agent strzok and friends thought when they bought a worthless insurance policy against trump.
Russia-gate = epic failure
Cheers
Nice bumper sticker quote. What are ya going to say when Mueller proves us right?
"Wow! Look at those flying pigs!"
If all you have is a bumper sticker or, tshirt slogan and, can't provide anything worth a damn, go somewhere else.
I believe something like this happened in 1928 also when Kennedy Sr and others did the same which was instrumental in triggering the crash of 1929.
Something like this occurred during the Bush presidency just before the big crash, this looks very similar to what I saw when I told my friends to get the F out of the market then.
The market has had a really, really big runup in a short period of time, so IMO its due for a pullback. But I wonder if that will be just a temporary thing before it resumes its upward path-- or that the market willcrash as you believe.
Anyway, here is the level at which 3 major indices closed today, Friday Dec, 22nd:
S&P 500
2,683.34
Dow 30
24,754.06
Nasdaq
6,959.96
I'm going to bookmark this, and we can check back here in a month or two, by which time we can see if your prediction is correct.
I'm hoping I'm wrong this time, it would make me happy if I was.
Stocks should be long term investments. The problem with today's stock markets is that everything is aimed at day traders, rather than long term investors. If you invest in stocks like 3M, which have a track record of good performance, then you can weather just about any downturn. The problem for the day traders is that they are not anywhere near capable of weathering any sort of downturn as they are interested in getting rich quick rather than long term.
This was the same kind of trading that was going on when the Great Depression hit, the difference then was people borrowed money to use to play the stock market, I don't think that they can do that today.
I don't know what caused the Great depression although I'm sure that information is available if you google it. However, my guess would be that, as a result of the Great Depression, regulations were put into law that prevent that sort of thing from happening again..
BTW you can borrow money from your broker to buy stocks. Its called "buying on margin". The brokers have certain requirements so they don't loan money to clients that are too risky-- and only loan a limited amount. (The reason stock brokers like to do this is that, since its a loan, they can charge interest).
I believe the rates for a small account is usually something like 6% or 7%/year. Whether that's worthwhile depends on whether or not you use it to make a wise investment.
I actually have an account with an online broker. About a year ago I applied for, and got, a margin acct. (I don't have a lot of money so the amount they would let me borrow isn't that much). Also I rarely use it-- sometimes a surprising opportunity arises to buy a stock and I don't have enough cash in my account-- so I buy it on margin and usually transfer funds so that I can pay it back in a few days-- or even, maybe, 3 weeks. (Or sometimes I borrow a little money to buy a stock, and then within a few days sell something else to pay back the margin loan). So the interest in very little.
But sometimes even the most solid "blue chips" have surprises for long term investors.
Remember when Kodak stock was a great investment?
How about GE?
Anyone remember "Ma Bell"? Of course that is all AT&T pretty much but, they got into a whole thing with monopoly's back in the day and, had to break up, that's how we ended up with so many new phone company's. But, this is getting away from the seed a little, the thing that has me up in the feathers right now is the chart that was in the article, that shows the dramatic drop in prices yesterday.
"Ma Bell" was AT&T-- and it was probably the best stock you could own. Why? Because it was a monopoly-- no competition! The price just kept on going up, plus it paid a good dividend. Finally they broke it up.
For a while there was a "duopoly"-- 2 big companies had most of the business (the new AT&T and Verizon). Sprint and T-mobile compete. (T-Mobile is doing well, I believe, due to very smart management).
I own a little Verizon (People buy most established phone stocks because they tend to have good dividends. They buy stocks like AT&T & Verizon mostly for dividends-- they buy newer companies like T-Mobile not for dividends but rather for "growth"-- hoping the stock price will go up and then they can sell it for a big profit).).
I just checked-- Verizon pays 4.43% a year-- that's a good dividend in today's' economy (a low interest rate environment). I believe AT&T pays a bit over 5%. (T-Mobile doesn't pay any dividend).
The thing to remember is that sometimes a big drop like that in one day can signal the beginning of a long down market-- but sometimes it doesn't!
I have a feeling we are not in for a major, longterm downturn, but rather a relatively short period of slightly lower prices. The reason being that the market has continually gone up for as relatively long period-- so a small decline for a while is to be expected. In other words, nothing serious.
But unlike most people on NT (who are never wrong-- about anything!) I could be wrong about this
T-Mobile is relatively new, give them time, I think they will start "putting out" soon.
Fact is, I would love to be wrong about this.
It’s nothing with the new tax plan companies are expected to pour billions into the market in stock buybacks. This minor trickle out will be overshadowed by the inflow of cash from the buybacks.