Bank of America: ignoring the “very dangerous” stock market now, trillions of dollars of cash will flow into the market

June 13, 2020

In the latest round of US stocks bottoming out, there are a lot of “cash out” watching the stock market continue to pull up. As the U.S. stock market shows a volatile trend in the near future, whether this fund can return to the market is crucial for the follow-up trend.

Savita Subramanian, Bank of America’s chief U.S. equity and quantitative strategy analyst, pointed out in a recent research report that in this round of rebound, the proportion of Bank of America’s customer holdings fell by three percentage points to 57.1%, while the cash position rose to 14%, which has exceeded the average level since 2005.

Subramanian said that even after the end of March, when U.S. stocks bottomed out, the level of cash positions continued to rise. Considering the valuation and yield level of the stock market and treasury bond market, about $1 trillion will be returned to the stock market. As bond yields approach zero, the trend will become more pronounced.

According to faceset, the dividend yield of the S & P 500 index is now 1.94%, almost three times the yield of the 10-year Treasury bond of 0.66%. Subramania points out that the last time the stock market was so “attractive” dates back to the 1950s.

With the economic restart and a series of fiscal and monetary policies, the three major indexes of the United States have rebounded nearly 40% compared with the low in the middle and late March.

Subramania explained that as the market entered the worst recession after the Second World War, the market performance told us not to worry too much. At this moment, it is quite dangerous to ignore this market.

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