JP Morgan: Fund Flows May Point to Higher Recession Risk

https://dailyalts.com/wp-content/uploads/2019/10/JP-Morgan-CEO-e1571085787336.jpg

The investment bank compared recent equity outflows to 2008

JP Morgan suggests that retail investors and consumers are losing confidence in the U.S. economy. The bank cited the outflows of capital from the equity markets and the rush into bonds as a reason. In 2019, $683 billion has moved into bond funds. Meanwhile, stock funds have seen outflows of $177 billion. These figures come from the Investment Company Institute, EPFR, and Bloomberg.

JP Morgan Worries About Recession Fears

JP Morgan analysts, led by Nikolaos Panigirtzoglou, issued a warning on Friday.

“Retail investors’ behavior in the fund space this year has the hallmarks of late-cycle investing with growing outflows from equity funds and strong inflows into bond funds,” analysts wrote. “Diminishing consumer confidence would naturally raise further expectations of recession by both economists and markets given the key role the consumer is playing in gauging recession risks.”

During the third quarter, stock funds saw a departure of $74 billion.

“The last time we saw such strong outflows from equity funds was during 2008,” analysts wrote.

However, the report did state that the move from stocks to bonds could be tied to “rebalancing by retail investors” instead of broader economic fears.

Investors have faced a significant amount of fear in the market in 2019. The year started with a tantrum over the Fed’s plans to continue raising interest rates. However, rapid cuts and a trade dispute between China and the U.S. saw many investors head for the exits.

Other geopolitical tensions include the recent attack on Saudi Arabian oil fields, Argentina’s currency collapse, and weak economic growth in China. The negative interest rate environment in Europe and parts of Asia has seen a swell of government debt yielding “less than zero” returns.

[Related: These Hot New ETFs Protect Your Downside…And…Someone’s Taking Out A Patent on Them]

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Alt Insights

January 29, 2020

Venture Capital: The Kobe in “Bryant Stibel & Co”

Venture Capital: The Kobe in “Bryant Stibel & Co”
Shape

Latest Alternative Investment News

https://dailyalts.com/wp-content/uploads/2020/02/bitcoin-2665933_640-binance.jpg
Digital Assets: A Cloud-based, Turnkey Crypto Exchange Solution From Binance
February 18, 2020     Digital Assets

Binance, which is the world’s largest crypto exchange by trading volume, announced Monday the launch of its Binance Cloud. The Binance Cloud is an all-in-one solution for crypto market participants…

https://dailyalts.com/wp-content/uploads/2020/02/currency-3077534_640-polychain.jpg
Venture Capital: Polychain Capital to Raise $200M To Back Crypto Startups
February 18, 2020     Digital Assets, News, Venture Capital

Polychain Capital’s second venture fund, which targets a war chest of $200 million, opened at the beginning of 2020. The crypto venture fund is accepting minimum investments of $1 million…

https://dailyalts.com/wp-content/uploads/2020/02/board-1364655_640-AI-EU-Rules.jpg
Artificial Intelligence: Margrethe Vestager to Announce the EU’s New Regulations For AI Today
February 18, 2020     Artificial Intelligence, Latest News, News

The EU’s rules set to be announced today will thrust on enhancing the region’s competitiveness but will do so with an emphasis on transparency, oversight, and protection of privacy.

https://dailyalts.com/wp-content/uploads/2020/02/window-blinds-932644_640-american-century.jpg
Liquid Alternatives: American Century May Unveil the Very First Non-Transparent ETFs
February 18, 2020     Latest News, Liquid Alternatives, News

Two American Century funds may be the first to test waters as “actively managed” ETFs. Having received the SEC’s approval for its final key filing, Cboe BZX Exchange, Inc. is…

Scroll to Top