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.


Shape

Latest Alternative Investment News

https://dailyalts.com/wp-content/uploads/2021/12/51629549260_00312e7f7d_c.jpg
Alternative Investments/Digital: Two Canadian Fund Managers Launch Metaverse Themed ETFs
December 1, 2021     Alternative Investments, Digital Assets, News

Canadian fund managers Horizons ETFs and Evolve Funds have launched the Horizons Global Metaverse Index ETF (“MTAV”) and the Evolve Metaverse ETF (“MESH”) respectively, on the Toronto Stock Exchange.

https://dailyalts.com/wp-content/uploads/2021/12/Solana.jpg
Digital Assets: Grayscale Launches Solana Trust, Protests SEC Rejection Of VanEck Spot Bitcoin ETF
December 1, 2021     Digital Assets, News

Grayscale Investments announced Tuesday the launch of the Grayscale Solana Trust to provide investors with exposure to Solana (SOL), the native token of the Solana network, a smart contract platform…

https://dailyalts.com/wp-content/uploads/2021/12/Jobandtalent_2.jpg
Venture Capital: Digital Temp Staffing Startup Jobandtalent Snags $500M Series E
December 1, 2021     News, Venture Capital

Madrid-based temp staffing marketplace Jobandtalent announced the closure of its Series E raise of $500 million at a valuation of $2.35 billion from Kinnevik and SoftBank Vision Fund 2. Existing…

https://dailyalts.com/wp-content/uploads/2021/12/black-g431352141_640.jpg
FinTech: BNPL Was “One Of The Stars” Of The Holiday Season For PayPal
December 1, 2021     FinTech, News

PayPal (NASDAQ: PYPL) enjoyed solid volumes for its buy-now-pay-later (BNPL) offering on Black Friday, continuing a trend the giant payments fintech observed all through November. In that month, for the…