They were buying US stocks on MAGA day.
“Wednesday saw the biggest daily inflow in five months,” BofA’s Michael Hartnett said, editorializing around an enormous inflow into US-focused equity ETFs and mutual funds.
As the figure below shows, US stocks enjoyed a near $33 billion haul over the latest weekly reporting period, the fourth-largest of 2024.
It was the fifth consecutive week of inflows, and the seventh in eight.
For 2024 as a whole, US-focused products and funds have seen a cumulative $334 billion of inflows.
In a testament to the idea that the latest influx was MAGA-charged, financials and small-caps benefited disproportionately. The latter saw $4.5 billion of inflows, the most in four months, and the former $2.5 billion, the most in years as illustrated by BofA, below.
There’s no mystery there: Small business sentiment loves Trump (because nothing says “little guy” like a man who spent his entire pre-political life disassociating himself from all things small, with the possible exception of his own hands) and financials love the prospect of deregulation.
The Russell 2000 was gunning for its best week since April of 2020, and the bank index headed into the closing bell Friday on track for its best weekly showing of the year.
Elsewhere in the flows data, emerging market equity funds suffered a fourth weekly outflow. Redemptions over that stretch come to $18 billion, reversing almost half of the China-fueled buying spree witnessed early last month. European equities leaked AUM for a sixth week and a 10th in 11.
Oh, and money market funds took in $117 billion globally on EPFR’s data. ICI’s weekly update showed an $80 billion inflow to US MMFs ahead of the Fed on Thursday.
Total US MMF AUM now stands at a staggering $6.6 trillion.
If that’s “dry powder,” then I suppose the potential exists for a big bang equity rally, contingent on the absence of too much volatility at the the long-end of the Treasury curve.
As BofA’s Michael Hartnett put it, “So long as he doesn’t lose the long-end, market’s gonna target 6.6k on Spoos by Inauguration.”
