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It feels like everyone and their mother is pouring cash into the market as if the good times will last forever.
It’s not just stocks that are feeling the love—bonds, gold, and even crypto funds are getting huge swaths of inflows from eager investors. Just take spot ethereum and bitcoin ETFs, which saw a staggering combined volume of $11.5 billion in a single day last week, according to Bloomberg data. On top of that, nearly a quarter of all recorded inflows into spot ethereum ETFs happened in just the last week.
Zooming out, global ETFs saw their largest weekly inflows in six weeks last week, with investments in tech leading the way.
And it wasn’t just last week: Overall, nearly $700 billion has been added to US-listed ETFs this year so far, as investors brush off fears of tariffs, a consumer slowdown, and shaky jobs data, and embrace optimistic corporate earnings forecasts instead.
There’s good reason to be bullish: Banks are upping their S&P 500 forecasts at a rapid pace, and there’s no denying that the vibe is just strangely sunny these days.
“Tariffs and some upward pressure on prices did not stop corporate America from delivering solid second quarter numbers,” explained Chief Equity Strategist at LPL Financial Jeff Buchbinder, who pointed out that the rate of companies on the S&P 500 beating revenue forecasts (81%) was one of the highest on record.
The flip side
On the other hand, not everyone is quite as optimistic that the bull market that keeps defying the haters is really built on solid footing.
“With U.S. equities lazily grinding higher, the market’s recent behavior is showing a surprising level of complacency as the S&P 500 Index has seen a historic 29% rise since April 8,” wrote Chief Investment Officer of Morgan Stanley Wealth Management Lisa Shalett in a note last week. She warned that, “Corporate earnings are uneven and weaker than they appear.”
Even portfolio managers who have raked in the profits as markets keep climbing are hedging their bets, and increasingly protecting their portfolios from losses. The pros are doing this by trimming equity exposure, investing in bonds, and adding options to provide some downside protection, noted Bloomberg.
Summer may be almost over, but it looks like the bears are coming out of hibernation.—LB