What's going on?
How’s that for an effective vaccine: investments in exchange-traded funds (ETFs) in Europe reached their highest levels since December 2019 on Monday.
What does this mean?
Investors have been celebrating the good news about potential coronavirus vaccines by loading up on stocks, and boy have they been celebrating: ETFs in Europe that track the value of stocks raked in $6 billion worth of investments last week – by far the most in 2020.
ETFs have kicked off in the US too: investors have put over $400 billion into them so far in 2020, compared to just under $250 billion at the same time last year. That brought the amount invested in ETFs as a whole to a record-breaking $5 trillion earlier this month, partly thanks to the prospect of an end to – *gestures wildly* – all this.
Why should I care?
For markets: JPMorgan says…
Don’t get too comfortable, warns JPMorgan: the investment bank said late last week that it’s expecting investors to sell $300 billion worth of global stocks by the end of the year. Stock markets did so well in November, after all, that it thinks investment managers will rebalance their portfolios – that is, sell stocks and buy bonds to keep their risk in check. And when that happens – by the end of December at the latest, JPMorgan reckons – it could trip up the stock market’s climb higher.
The bigger picture: Goldman says…
Goldman Sachs, for its part, reckons stocks are more attractive than bonds despite November’s move higher, especially if JPMorgan is right about their short-term prospects. It’s particularly keen on stocks outside the US like Europe, Japan, and emerging markets: they’re lagging behind right now, but the company thinks they’ll catch up over the next three months. Beyond that, the company doesn’t have a preference on region: it thinks all stocks will be looking good a year from now.