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Illustration: Aïda Amer/Axios

The historic inflow to money market funds from institutional asset managers finally paused last week and that could mean investors are starting to believe in equities again after steering clear of making major investments over the last two months.

What happened: Money market funds, which are effectively savings accounts, saw just $1.41 billion of inflows for the week ending May 21, data from the Investment Company Institute showed — and it was entirely from retail investors.

The big picture: Professional fund managers have moved more than $1 trillion into money markets since the week ending March 18, bringing total holdings to $4.8 trillion.

  • That's a record high and close to $1 trillion more than the record level prior to 2020, during the Great Recession.

What they're saying: “The extreme attractiveness of stocks over bonds, particularly as rates have plummeted back to near zero, can be the catalyst for the rotation into stocks, driving the market higher,” Savita Subramanian, Bank of America's head of U.S. equity and quantitative strategy, said in a recent note to clients.

By the numbers: Investment in stocks among BofA's clients has fallen by 3 percentage points to 57.1% while cash allocations have risen to nearly 14%, well above the historical average dating back to 2005, she noted.

  • The S&P 500′s dividend yield is more than three times the yield of the 10-year U.S. Treasury note — 1.95% vs. 0.66%, according to FactSet.

The bottom line: “As the economy enters what our economists forecast as the worst recession in the post war era, the market is telling us not to worry," Subramanian said. "And it is dangerous to ignore the market.”

Go deeper: Stock market has its best day since early April

Go deeper

Dion Rabouin, author of Markets
Sep 2, 2020 - Economy & Business

Here comes the real recession

Illustration: Sarah Grillo/Axios

Economists are warning that the economic downturn caused by the coronavirus pandemic is now creating another recession: mass job losses, business failures and declines in spending even in industries not directly impacted by the virus.

Why it matters: The looming recession — a possible recession within a recession is less severe than the coronavirus-driven downturn. But it's more likely to permanently push millions out of the labor force, lower wages and leave long-lasting scars on the economy.

"Atmospheric river" swings Northern California from drought to flood

The bomb cyclone and atmospheric river seen via satellite on Sunday. The center of the storm is at the middle of the comma shape, due west of Washington State. (CIRA/RAMMB)

A series of powerful "atmospheric river" storms are delivering historic amounts of rainfall across parts of drought-stricken California and the Pacific Northwest from this weekend, forecasters warn.

Why it matters: A strong atmospheric river, packing large amounts of moisture, is predicted to whiplash Northern California from drought to flood.

Mike Allen, author of AM
4 hours ago - Politics & Policy

Fauci fires back at Rand Paul for slam on tonight's "Axios on HBO"

Responding to charges by Sen. Rand Paul on Sunday's "Axios on HBO," NIAID director Anthony Fauci told "ABC This Week" that it's "molecularly impossible" for U.S.-funded bat virus research in China to have produced COVID-19.

Why it matters: The issue 0f Wuhan research was reignited on the right last week with a National Institutes of Health letter to Congress disclosing more about the research.