According to Bloomberg, Bank of America strategist Michael Hartnett warned that the three-year equities investment cycle has run its course, with data showing investors are pulling out of equities and investing in money market funds and bonds.
The bank cites data from EPFR Global that indicates a $3.9 billion outflow of funds from equities in the week ending May 24.
The current 2023 sees an increase in cash of about $756 billion, the largest increase since 2020.
The S&P 500 was volatile in May and the US economy is facing default on government debt, raising fears of a possible recession.
Capital flows in the current year differ significantly from previous years. Over the past three years, equity funds have raised $175 billion, $949 billion and $182 billion, respectively.
Hartnett advises investors to sell stocks when the S&P 500 reaches 4200, about 1% above the last close.