It’s encouraging to see some green in the market during these past two months. Investors are slowing coming back out of the fetal position and are noticing that inflation’s coming down. And that’s giving them confidence to put money money to work into risk-on assets like stocks again.
Yet this will be a gradual process. There’s still healing required from 2022, and still a ton of money on the sidelines. At the end of May, more than $5.5 trillion of American assets was still parked in money market accounts.
While getting a 5% APR to keep your cash in the bank might sound good today, this will also be the first capital to return back to equities. The S&P’s 17% YTD return will soon switch the investor psychology dial from ‘fear’ back to ‘greed’.
I expect this is good news for the financial services sector, as well as larger tech companies who will benefit from exposure to the Nasdaq and related ETFs.
All of the above is context that’s influencing my upcoming stock recommendation. Looking forward to sharing it on August 1st.
