Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Sarah Grillo/Axios

Even after the pullback to end last week, U.S. stock prices are booming and fund managers have largely hitched their wagons to the idea that prices will continue rising for the foreseeable future. But many are hedging their bets, showing bullishness in words much more than in deeds.

What's happening: The vast majority of assets — including currencies, bond prices, commodities and equities — have risen notably in price since the start of the third quarter. It’s a "buy anything" market.

  • Still, data from the Investment Company Institute show equity funds have seen net outflows every week for at least the past 10 and for every month of the year, including $62.1 billion of outflows in July.
  • Bond funds, conversely, have seen net inflows each of the last 10 weeks and in every month since April, including $98.5 billion in July.
  • Money market funds remain near $4.5 trillion in holdings, close to record highs.

Between the lines: Investors are buying call options at historic rates, which give them the right but not the obligation to purchase stocks at a certain price. That means they benefit if prices continue to rise but can avoid losses if they fall.

  • Citigroup’s panic/euphoria model — tracking metrics such as options trading, short selling and client note bullishness, instead of stock buying — has reached almost three times the level denoting euphoria and shows the longest run of extreme bullishness since the early 2000s.

Reality check: The U.S. stock market continues to outperform the rest of the world by a wide margin despite the fact that the U.S. has done the worst of all developed economies in handling the virus, in terms of deaths, infections and the ongoing infection rate.

  • While improving, the economy remains depressed, with GDP expected to remain below 2019 levels until at least 2022.
  • Close to 30 million people remain on unemployment insurance.
  • Worse, a fundamental recession is developing within the downturn caused by COVID-19, economists say.

Be smart: U.S. stocks are defying fundamentals too. Earnings on the benchmark S&P 500 outperformed expectations by a record amount in the second quarter, but were still the worst since Q1 2009, down by 32% year over year, and are expected to fall 22% in the third quarter.

Don't sleep: The law requires asset managers to stand behind any public endorsements they have made and many firms can take months to make trades recommended by asset managers.

  • That means more money could flow into stocks soon, but also could mean many of the public stances asset managers have taken are months old — a relative eternity in the era of COVID-19, and based on now-outdated information.

Go deeper

Dion Rabouin, author of Markets
Updated Dec 16, 2020 - Economy & Business

Fed pledges to continue buying bonds until economy makes "substantial" progress

Fed chair Jerome Powell. Photo: Susan Walsh-Pool/Getty Images

The Federal Reserve kept rates unchanged at 0%–0.25% at its latest policy meeting, but changed its statement to include a promise to continue to buy at least $120 billion of bonds each month "until substantial further progress has been made toward the Committee’s maximum employment and price stability goals."

Why it matters: Fed chair Jerome Powell consistently stressed during his press conference that the Fed was nowhere close to reducing its massive bond-buying program, even though its evaluation of the economy had improved and would continue to provide monetary policy support.

41 mins ago - World

Netanyahu campaigns against Biden's plan to save Iran deal

Netanyahu campaigns at a gym last month. Photo: Pool/AFP via Getty

Israeli Prime Minister Benjamin Netanyahu indirectly criticized the Biden administration for its intention to return to the Iran nuclear deal and told his supporters he was prepared to "stand against the entire world" to stop it.

Why it matters: This is a major change of tune for Netanyahu, who had been careful in his statements on the Iran deal and avoided publicly criticizing President Biden. The statement was part of Netanyahu's attempt to rally his base ahead of Israel's election on March 23.

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Tech: "Fludemic" model accurately maps COVID hotspotsVirtual doctor's visits and digital health tools take off.
  2. Politics: Schumer says Senate will stay through weekend to vote on COVID relief — Republican governor of West Virginia says there's no plan to lift mask mandate.
  3. World: Canada vaccine panel recommends 4 months between doses.
  4. Business: Firms develop new ways to inoculate the public.
  5. Local: Ultra-rich Florida community got vaccinations in January.

You’ve caught up. Now what?

Sign up for Mike Allen’s daily Axios AM and PM newsletters to get smarter, faster on the news that matters.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!