11/27/19 – Happy Thanksgiving!

Stocks climbed higher through Wednesday in the holiday-shortened week. Markets are closed tomorrow and will only be open until 1pm on Friday, so the Weekly Recap is coming out early. Both indices closed at all-time highs as concerns about economic growth abate. For the week, the Dow gained 1.0% while the S&P 500 increased 1.4%. Read More

This has been a good year for stock markets. One of the least talked about aspects of this strong market has been equity fund flows. Fund flows track how much new money is invested into equity mutual funds and exchanged-traded funds (ETFs). These flows can tell investors a few things. First, if people are pulling money of equities, there is a belief that investors are nervous and reducing exposure to riskier assets. If a lot of money is flowing into equity funds it generally means investors are bullish on future prospects. Most of the time, fund flows can be a leading indicator of where equity prices are going. More money flowing into stocks should create more demand and push prices higher and vice versa. What we’ve seen throughout most of 2019 though is a stock market that continues to move higher while investors, in aggregate, are pulling money out of equity mutual funds and ETFs. Through the first three quarters of 2019, over $150bn flowed out of equity funds. That’s a tiny percentage of the overall equity market, but it creates a situation where there is money on the sideline to provide additional price support going forward. Fund flows have started turning positive this month and while the future is never known, it does seem to offer tailwinds to the market over the coming week/months.

Oil increased 0.3% this week to close at $58.13/barrel. The yield on the 10-yr Treasury held steady at 1.77%. The average rate on a 30-yr fixed rate mortgage moved higher to 3.68% from 3.66% last week.     

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