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Situational Awareness: Eurozone industrial output fell by 2.1% in December — the most in four years. It's a worrying sign as the drop took place before the novel coronavirus outbreak. (Bloomberg)
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Illustration: Aïda Amer/Axios. Photo: Sunset Boulevard/Getty Contributor
After pouring record inflows into bond funds last year, investors are doing so at an even faster pace in 2020 — pushing 10 times more money into bonds than stocks.
By the numbers: More than $65 billion has flowed into bond funds this year, according to Lipper Refinitiv data provided to Axios, outpacing inflows through 2019's record pace when bond funds took in $316 billion.
Why it matters: As of Tuesday's close the S&P 500 had made 10 record highs in just six weeks this year, and has risen and held above 3350, a level many investment managers targeted in their 2019 end-of-year outlooks.
What's happening: Experts tell Axios that a confluence of issues are behind the bond-buying binge that has elevated purchases of investment-grade corporates and U.S. Treasuries over equities despite the stock market's strong performance.
Yes, but: When removing equity mutual funds, the allocation to stocks so far in 2020 is significantly higher. Investors have been moving out of higher cost mutual funds and into low-fee (and even negative-fee) ETFs for years.
Still, that number is only a bit more than half of the bond fund inflow total, and bonds have seen a much higher volume of flows to funds excluding ETFs ($47.7 billion) than to ETFs ($17.9 billion).
The big picture: Thanks in no small part to the Fed holding interest rates at historically low levels and continuing its bond buying program, investors have piled into debt over the past two years.
Since 2010, more than three times as much money has flowed into bonds as into stocks — $1.5 trillion vs. $428 billion.
Fun fact: During that time, the value of stock funds held by investors has gone from $5.7 trillion to $14 trillion, while the value of bond fund holdings has gone from $2.7 trillion to $5.7 trillion, per Lipper. This is largely because equities have outperformed bonds by so much.
China announced additional tax breaks and subsidies, including exempting people participating in epidemic prevention and control from personal income tax, and waiving value-added tax for workers in sectors like transportation and delivery. (Xinhua)
Dish executives have told some on Wall Street that the company has held talks with Google and Amazon about building a new wireless carrier. (NY Post)
Huawei can covertly access mobile networks through back door channels meant for law enforcement, U.S. officials say. (WSJ)
China's Hubei province reported 1,068 new confirmed cases of the novel coronavirus, down from a peak of more than 3,000 and the lowest number since Jan. 31 (Reuters)
The number of job openings in the U.S. declined consistently throughout 2019 and took a nose dive in the last two months of the year, the government's December Job Openings and Labor Turnover Survey (JOLTS) showed.
Why it matters: “Net, net, job openings around the country are plummeting in a way that we hate to say looks like a recession,” Chris Rupkey, chief financial economist at MUFG Union Bank, told CNBC.
Yes, but: The numbers in the rest of the JOLTS report tell a different story.
Household debt increased by more than $600 billion last year, topping $14 trillion for the first time, and marking the largest one-year jump since 2007, new data from the New York Fed shows.
Between the lines: More young people are taking on credit cards and there has been an increase in delinquencies since 2016, "notably among younger borrowers,” Wilbert Van Der Klaauw, SVP at the New York Fed, said in a statement.
But, but, but: While total household debt has risen, the level of household debt service as a percentage of disposable income has fallen to an all-time low, according to St. Louis Fed data.
UnitedHealth Group is mostly known as one of the country's largest health insurance carriers, but the massive conglomerate is increasingly making its money from things that have nothing to do with health insurance, Axios' Bob Herman reports.
The bottom line: UnitedHealth doesn't just want to be your health insurer. It wants to be your doctor, your outpatient surgery center, your mail-order pharmacy and your drug price negotiator.
By the numbers: UnitedHealthcare is still UnitedHealth's most profitable unit, generating more than $10 billion in operating earnings in 2019 as a major carrier of employer and Medicare Advantage plans.
Between the lines: The most profitable segment within Optum is OptumRx, which is part of the pharmacy benefit manager oligopoly that controls how drugs are paid for and which drugs are covered.
A federal judge approved the T-Mobile and Sprint merger without conditions on Tuesday and the market took it as a green light to buy stock from every company involved, as the DOJ and FCC had also already approved the deal.
What happened: Sprint stock rose a staggering 77.5%, T-Mobile's stock jumped 11.8% to $94.49 and Dish Network's stock, the company that will create a cellphone company to compete with the newly combined Sprint-T-Mobile behemoth, gained 7.1% to $39.48.
Wangari Maathai was an environmental and political activist who founded the Green Belt Movement in 1977 and became the first African woman to win the Nobel Prize.