A new wave of money market to drive the stock market to a record. Bank of America (BofA) data show that over the past five months, the size of the money flowing into equity funds has reached nearly $570 billion, a breakthrough in the past 12 years since the sum.
Bank of America chief investment strategist Michael Hartnett said, benefiting from ultra-loose monetary policy and massive fiscal stimulus, the global stock market mania spread more than. Since last November, equity fund inflows have totaled $569 billion, surpassing the $452 billion of the past 12 years.
With stock market valuations at their highest levels since the dot-com bubble of the late 1990s and the S&P 500 index’s estimated cost-to-benefit ratio nearing 22 times, the massive flows have raised concerns about downside risks.
Global stock market valuations are rising and are now above their long-term averages (Chart: Reuters)
Wall Street view.
Emmanuel Cau, head of European equity strategy at Barclays (Barclays), said, “Goldilocks (Goldilocks) and asset meltdown (melt-up) are the buzzwords of the week, and we can observe that from market valuations.” The company remains optimistic about the market outlook, but believes there is little room for upside.
Deutsche Bank (Deutsche Bank) said this week, as economic growth reaches its peak, the stock market is expected to fall back 6-10% in the next three months.
Tobias Levkovich, Citi’s chief U.S. equity strategist, believes that market sentiment and stock market valuations are equally worrisome, but capital flows continue to push the index higher.
From a technical perspective, both the S&P 500 and the pan-European Stoxx 600 are at overbought levels (Overbought), while the Relative Strength Indexes (RSI) are at 70, implying that profit-taking selling may emerge.
The S&P 500 and the pan-European Stoxx 600 are both at overbought levels
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