Good morning, readers. Individual investors haven't fled the market as war in Europe intensifies — and that could be a bullish signal for stocks, even as global stocks rally on IEA plans today. Plus, legendary investor Ray Dalio sat down with Insider to talk about the future of US economic dominance, war, and portfolio management.
Here we go.
1. Retail investor participation might be a silver lining for the stock market. Amid war in Ukraine, retail investors have shown a willingness to buy the dip even as some big institutions shed exposure to equities. Bank of America analysts say this might be a good sign.
"Retail clients have been more aggressive buyers of this dip than other 10% corrections post-crisis, potentially on fear of missing out on what has generally been a successful strategy post-crisis," Bank of America said in a Tuesday note.
While some observers have deemed retail participation (derisively known as "dumb money" among some Wall Street pros) as an indicator of pain to come, the BofA analysts note that higher participation has actually signaled strong returns ahead. Periods of high retail inflows have coincided with above average returns for the S&P 500, they said.
Hedge funds, on the other hand, are doing the opposite. They've reduced their exposure to the stock market, with record outflows among BofA's hedge fund clients as they seek to de-risk their portfolios.
Institutional clients overall though have joined retail investors as net buyers in five of the last six weeks, another potentially positive signal for stocks.
In other news:
2. Dow futures shot up 450 points after the head of the IEA said it could release more oil. Brent crude and WTI are down more than 2% as worries ease about rising energy prices and inflation. Here are the latest moves on the market.
3. On the docket: Fossil Group Inc, Hudson Global, and Korn Ferry, all reporting.
4. VIDEO: Billionaire Ray Dalio told Insider why US economic dominance is facing its greatest competition yet. He also broke down which assets investors should avoid right now and which ones they should add — and how to navigate the unprecedented environment.
5. Liquidity in commodity markets is "collapsing," said Goldman Sachs' head of commodity research. The current volatility is making it worse too, according to Jeff Currie. He broke down why margin calls are catalyzing spikes in commodities.
6. The West has already started to feel the stagflation blowback from Russia's war on Ukraine, said Mohamed El-Erian. "The economic consequences of the war will not be confined to the countries fighting it," the veteran economist said. He said the war is going to compound the existing inflationary pressures.
7. A financial-research firm said there's a 10% chance of a nuclear apocalypse this year. But even if a massive threat looms, it still recommended that investors stay bullish on stocks — here's why.
8. A bearish research-firm head who called the inflation threat in early 2021 predicted that price growth could surge to double digits in the US and Europe. Investors focused on rate hikes might be ignoring a bigger risk, Julian Brigden explained. This is what to look out for as the Fed scrambles to cool the economy.
9. This 25-year-old makes about $150,000 a month renting units without owning any property. He couldn't afford to keep buying property initially, so he found another way. He shared his strategy that helped him scale in 15 months.
10. The labor force participation rate for women has come a long way. It was 58% in February for women aged 20 and over, which is still below where it was before the pandemic. Here's a closer look at the numbers.
Curated by Phil Rosen in New York. (Feedback or tips? Email [email protected] or tweet @philrosenn.)