Equity investors showing greed, so may be time to take profits, says Bank of America's Hartnett
Overflowing investor enthusiasm is close to triggering some reliable sell signals in the stock market, according to Bank of America chief investment strategist Michael Hartnett. Money is pouring into equities as well as their fixed income counterpart, high-yield bonds, indicating that investor willingness to shrug off geopolitical headwinds is approaching danger levels, Hartnett said in his weekly note that examines where investors are putting their cash. "Greedy inflows saying take some profits off the table," the strategist wrote. One specific area where he pointed was the flows to global equity and high-yield fixed income. Over the past four weeks, the two categories have taken in 0.99% of cash relative to assets under management — just one one-hundredth of a percentage point from a tactical sell signal. Conversely, outflows exceeding 1% have been a reliable contrarian buy sign of excessive pessimism. The observations come with the S & P 500 punching through to a new record Friday as investors show a strong willingness to overlook a multitude of headwinds , from geopolitical tensions to President Donald Trump's tariffs. .SPX YTD line S & P 500 performance in 2025. There are other potential danger signs amid all the bullishness: BofA's Bull & Bear indicator of sentiment is at 5.8, the highest since November 2024. Also, nearly three-quarters of global stock indexes are trading above their 50- and 200-day moving averages. When that number, currently at 73%, hits 88%, that's been a good time to sell, Hartnett said. Hartnett said the S & P 500 above 6,300 would trigger a sell — still nearly 2% away, but a number to watch. U.S. stocks this year are on pace for their third-largest inflow of new cash ever, with $164 billion rolling in so far, according to BofA data. Large caps are on pace for record inflows, while small caps are on track for record outflows.
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Yahoo
12 minutes ago
- Yahoo
I'm a stay-at-home. Do I take a part-time job to spend more time with my kids — or get a job for six figures?
I've been thinking about the kind of life I want, why I want it, and the finances needed to get there. We live in a high-cost-of-living area and have to stay since my husband's work is here. Our children are in elementary school and finally settling in, but I wouldn't mind moving somewhere else for better schooling and programs for kids with ADHD and speech issues. Growing up, my parents drilled it into me to work hard, which I really appreciate. But it came with a heaping side of shame that if I didn't 'achieve my full potential' and make millions of dollars and be on the cover of Forbes magazine, I would be a disappointment to them. At the same time, they were not supportive when I went into the workforce. When I got my first promotion, they scoffed at the paltry increase. I've been working since I was 14; sometimes in the family business, sometimes with side gigs. If I had saved even a quarter of what I've earned and put it into a Roth IRA, I'd have a decent nest egg when I reach my 50s. I find it very odd that for parents who want me to be my best, they didn't educate me about personal finance, but just kept pushing me to get more schooling and work more hours at the family business. I guess it was easier to keep me under control that way. My brother stole $100K from my mom to buy bitcoin. Do I convince her to sue him? Most American weddings are a lot more extravagant than the nuptials of Amazon's Jeff Bezos 'He doesn't seem to care': My secretive father, 81, added my name to a bank account. What about my mom? S&P 500 scores record high for first time in 4 months. What could push stocks higher from here? JPMorgan has a new way of forecasting the stock market — and there's a surprising finding Now, I've been a stay-at-home mom for the last decade. It's one of the hardest jobs because the work is constant, there are no holidays or sick days, there are no colleagues or intellectual stimulation, and my parents are still scoffing at my life choices when they were the ones to push me to get married and have kids. I did find a man I love and who loves me and I'm so grateful for our two beautiful, healthy kids, but I still hear the criticisms, expectations and disappointments inside my head. Again, I find it odd that my parents would push me to get married and have kids without a plan for getting back to work. Don't miss: My wife and I have $7,000 in pensions, $140,000 in cash, plus Social Security. Can we afford to retire? What now? Do I take a low-paying part-time job that allows me the freedom and flexibility to be there for my kids? Or do I put them in after-school programs that are a bit of a madhouse so that I can work a full-time job? Do I take courses and earn certificates and go for a six-figure position in the tech field? Or do I work at my kids' school or in a municipal office? My husband makes a good living, which allows me to stay home and take care of the kids. We make a good team. But I'm aware that if something happens to either of us, our family/kids would be in trouble. So that is a good reason for me to at least try to make six figures. Is it possible to have a decent life making $40,000 a year in my 50s and 60s? Part of me wants to get a master's degree in library science online and apply to work at local libraries. I'm not crazy about paying for a master's at this time, only to end up with a job that pays at most $35 an hour. So I may only go that route if there are scholarships or such. So much of my head has been filled with thoughts of needing to be the best, the brightest, the wealthiest, and I've just come to the realization that that's not where true happiness lies. But I'm also aware that I've been sheltered and did not have to live on $40,000 a year. What is the minimum needed to have a decent retirement? A fully paid off house, $1 million dollars spread out across 401(k), taxable brokerage, (Roth) IRAs and perhaps a part-time job with health benefits? I feel awful that we have nothing set aside for our kids' college funds, but I am thinking that I could work at a college that provides tuition benefits to direct family members. Is this a possibility? Just to make this scenario extra fun, my parents have tried offering me monetary gifts with conditions that would make me feel like I would be again under their control. I wonder if I'm being naive and stupid not to accept some of these gifts. Stay-at-home Mom Related: My job is offering me a payout. Should I take a $61,000 lump sum or $355 a month for life? The last thing I want to do is give you homework, but I'm going to give you homework. The first thing you can do is get a giant piece of paper and write all the things your parents did to disappoint you, annoy you, thwart you, undermine you, frustrate you and generally make you feel less than. Then buy a giant red marker and write in big letters over all of those complaints: 'THEY DID THE BEST THEY COULD AT THE TIME.' And then burn it. They want to help you now. Maybe it's a form of amends, or perhaps they believe they were good parents. They did what they did. They said what they said. They are who they are. They wanted to help you, but they didn't have all the skills. There was no workbook, as you know, and what's done is done. The second thing you can do is know that everyone has regrets, particularly financial ones, and it's easy to have the decision-making skills of Mary Barra or Warren Buffett when you're looking back with hindsight. When you're done forgiving your parents for raising you, forgive yourself for all the twists and turns you wish you'd done differently. If it helps, get out a separate sheet of paper and write all the good decisions you've made in one column, with your regrets in another column, and do the same thing again. Take out that red pen and write: 'I DID THE BEST I COULD AT THE TIME.' And burn it. Life is pretty good. You've gotten this far. If you're unsure about whether to go back to work full-time or part-time, ease back into it. If it suits you, good. If you get the urge to go back and join the rat race full-time with an eye on a six-figure salary in a job that gives you a renewed sense of purpose, fantastic. If it also helps you save more for retirement and put money aside for your children's college education in tax-advantaged 529 plans, great. Perhaps it would allow you and your husband to pay off your mortgage earlier than planned. But there's no right/wrong answer. Nobody will write, 'I wish I spent more time at the office' on their gravestone. Don't miss: 'I'm 68 and my 401(k) has dwindled to $82,000': My husband committed financial infidelity and has $50,000 in credit-card debt. What now? Here's the headline: It's OK to take the foot off the pedal when your children get a little older and you have more time to yourself. You've been working a 24/7 job raising your kids. Research shows that women take more time off from their careers than men and their lifetime income suffers as a result, as does their ability to rejoin the workforce at a similar level of seniority. Life, society and the workplace, as they're currently structured, are not fair or equal. But you have a husband who works full time and earns a good living, so see a financial therapist or a psychologist and talk through your plans. You don't have to put even more pressure on yourself. If your gut tells you that a master's in library science does not have the kind of reward that makes it worthwhile, don't do it. But yes, it's possible to have a comfortable life and retirement if you earn $40,000 a year. Millions of Americans do it, despite letters to this column from couples with millions of dollars who worry about retirement. Studies repeatedly warn Americans that they need $1 million or more, but the truth is you need enough to ensure that your expenses don't exceed your income, have at least two years of a cash cushion for unexpected events, including medical complications — and long-term-care insurance doesn't hurt. What's missing from my answer is women's voices, so here are a few thoughts on your letter about returning to work from the Moneyist Facebook Group. 'You'll be providing a good role model for the kids, too. Since family life is a job in itself, don't let the new job be too demanding, just pleasantly challenging,' one woman writes. 'Start by taking a few classes at a local community college to get some idea of what you might like to pursue,' another adds. A former teacher says: 'Although teaching wasn't at the top of the pay scale, by 63 I was retired and debt-free with enough to live well and do a little traveling.' The past is another country. The future is a travel agent's window. Give yourself a break today. Related: We're living in 'end times' when you can't retire on $1 million Most American weddings are a lot more extravagant than the nuptials of Amazon's Jeff Bezos My husband will inherit $180K. I think we should invest the money. He wants to pay off his $168K mortgage. Who's right? I'm 51, earn $129K and have $165K in my 401(k). Can I afford to retire when my husband, 59, draws Social Security at 62? What drove stock market's record-breaking week? Don't overlook growing rate-cut expectations. My job is offering me a payout. Should I take a $61,000 lump sum or $355 a month for life? There's an important market indicator that suggests investors remain wary. It's good news for stocks. Coinbase's stock is up over 40% this month as Wall Street projects amazing profit growth 20 banks expected to increase their dividends the most following the Fed's stress tests
Yahoo
13 minutes ago
- Yahoo
Five Risks for Stocks That Cloud the Outlook for the Second Half
(Bloomberg) — Some of the world's biggest money managers are wary of chasing the stock rally further in the second half of 2025, bracing for more volatility. Philadelphia Transit System Votes to Cut Service by 45%, Hike Fares US Renters Face Storm of Rising Costs Squeezed by Crowds, the Roads of Central Park Are Being Reimagined Sprawl Is Still Not the Answer Mapping the Architectural History of New York's Chinatown Markets are wrapping up a wild six months that saw the S&P 500 plunge 19% from peak to trough, before it recouped those losses. The index closed at a record high on Friday after the ceasefire between Israel and Iran revived the risk-on rally. The recent bounce is not enough for many institutional investors, who cite a litany of risks confronting equities. The fast-approaching deadline for tariff deals, a mixed outlook for earnings and questions around America's debt and leadership of the Federal Reserve loomed large in interviews with investment firms. They're also mindful of US-China tensions, potentially eased somewhat by the countries' just-announced trade framework. 'We are more cautious than constructive,' said Joe Gilbert, a portfolio manager at Integrity Asset Management LLC. 'The outlook for the second half of the year is always framed by the starting point, and that starting point from the perspective of valuation and earnings growth is not that attractive.' Gilbert's view is typical of the downbeat sentiment among institutional investors from Singapore to London and New York as June draws to a close. It's also reflected in equity positioning by global asset managers, which remains well below historical levels. Here's more about five key risk factors that stock investors said they are watching closely for the rest of the year: Tariff Deadline An immediate threat to the equity rally lies in the July 9 deadline set by President Donald Trump to reach trade pacts with major US partners. The stakes are high as exporters without a deal will be hit with much higher tariffs than the current 10% level applied to most countries. The UK is an outlier, having secured an agreement on paper. The European Union and the US believe they can clinch some form of trade agreement in time, Bloomberg News reported Friday, while talks with India, Japan and many others continue. Bloomberg News has also reported that the US is nearing agreements with Mexico and Vietnam. Still, investors got a reminder of the risks of sudden turbulence in this area of international relations when Trump on Friday said he would terminate trade talks with Canada in response to a 3% digital services tax. Investors generally agree that a tariff shock for markets on the scale of 'Liberation Day' in early April is unlikely. There are also hopes that the deadline could be pushed out. Still, Anthi Tsouvali, a strategist at UBS Global Wealth Management, said that while 'markets are not complacent anymore, there are risks until a firm deal is announced.' Tsouvali said she has a neutral stance on equities. 'There's going to be a lot of uncertainty, a lot of volatility,' she said. 'We are not taking active risk.' Earnings Corporate resilience has been a key support for the sharp rebound in US stocks since April. Analysts on average expect earnings for S&P 500 companies to rise 7.1% this year before an acceleration in 2026, according to data compiled by Bloomberg Intelligence. That will be put to the test within a few weeks as second-quarter results roll in. The last earnings season saw companies across the world pull forecasts for the year, citing cost increases and weak consumer sentiment. A June survey by the Business Roundtable showed C-suite executives were more pessimistic than three months earlier, with fewer expecting to ramp up hiring or capital spending. That said, Trump's $4.2 trillion tax-cut package — facing a key Senate vote in the week to come — could provide a boost to companies struggling with tariff hikes and costs to rejig their supply chains. 'Within this more challenging environment, you've got to think that those growth expectations have got to come down,' said Louise Dudley, a portfolio manager at Federated Hermes. For the broader market, 'perhaps the most that we can expect is a sideways move from here,' she said. Geopolitics An end to hostilities between Israel and Iran has pulled oil prices lower, easing a worry for equity investors about how this would feed through to inflation and complicate the Fed's path to interest-rate cuts. Still, the boost to sentiment is fragile as uncertainty swirls around the future of Iran's nuclear program. 'Despite this temporary relief, we continue to see geopolitical risk as structurally elevated,' said Francisco Simón, European head of strategy at Santander Asset Management. The firm retains an underweight stance on equities, favoring a 'cautious and selective approach,' he said. The fraught relationship between the US and China also keeps investors on edge. They will be scouring for details of a trade framework the two sides said this week that they have reached. Among key points are whether the agreement will free up access to Chinese rare earths for American companies and remove obstacles for Chinese tech companies in obtaining cutting-edge US chip technologies. US Debt, the Fed The US lost its last top credit rating in May amid deepening investor concerns over its ballooning debt. Meanwhile, Trump's tax-and-spending bill is expected to add trillions to federal debt over coming years. 'We know that the problem is not going away,' said Neil Robson, head of global equities at Columbia Threadneedle Investments. He noted that a market meltdown sending bond yields surging and equity valuations plunging remains a low probability event. 'But we got to be aware,' he said. For Nicolas Wylenzek, a macro strategist at Wellington Management, the handling of the Fed Chair's succession is also an important issue for investors. Trump said Wednesday that he has three or four people in mind to follow Jerome Powell when his term expires next year. A risk mentioned by some investors is that the US experiences its own version of the UK's 2022 'Liz Truss moment.' That was 'partly triggered by uncontrolled spending, in combination with some questioning of the independence of the Bank of England,' Wylenzek said. 'Could we see something similar?' he said. 'There's a risk that markets suddenly start to get worried that the next chairman of the Fed is not as independent as they maybe have been in the past.' Valuations With stocks trading at 22 times earnings in the next 12 months, the S&P 500's valuation is well above its 10-year average of 18.6 times. Firms like Wellington and AllianceBernstein are among those expecting the multiple to remain elevated due to future rate cuts and the resilience of big tech companies. But others see the lofty price tag as an obstacle to buying more stocks. 'US equity valuations, particularly in market-capitalization-weighted strategies such as the S&P 500 Index, may have further to adjust if US economic conditions deteriorate,' said David Chao, a global market strategist at Invesco Asset Management. 'Markets outside of the US mostly trade at lower multiples, and we think the gap with the US will continue to narrow.' —With assistance from Kit Rees, Macarena Muñoz and John Cheng. America's Top Consumer-Sentiment Economist Is Worried How to Steal a House Inside Gap's Last-Ditch, Tariff-Addled Turnaround Push Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags Apple Test-Drives Big-Screen Movie Strategy With F1 ©2025 Bloomberg L.P.
Yahoo
32 minutes ago
- Yahoo
Demand for new construction, long a housing market bright spot, is quickly weakening
For years, homebuilders were relatively insulated from the deep slump the rest of the housing market faced. But now, they too are feeling the pinch of an underwhelming spring homebuying season — and scrambling to adjust. New home sales plummeted 14% in May from a month earlier as high prices, elevated mortgage rates, and economic concerns kept buyers away. Thirty-seven percent of builders reported cutting prices in June to help move a growing backlog of supply. Publicly traded homebuilders Lennar (LEN) and KB Home (KBH) both highlighted slower market conditions in their second quarter earnings reports. Many builders are now pulling back on future development plans. 'Consumers grew increasingly apprehensive about the economy and rising geopolitical tensions, driving consumer confidence to a 13-year low. As a result, the housing market cooled,' KB Home President and COO Robert McGibney said Monday on a call to discuss earnings. The company cut prices in some markets in response, but the move hasn't resonated with consumers. 'Despite these actions, demand weakened,' he added. And now, homebuyers have more choices. Builders are sitting on the biggest pile of completed, unsold inventory since 2009 — and have the most single-family homes for sale since 2007. Meanwhile, existing home listings have spiked 30% from a year ago. In a growing number of markets, there are now more homes for sale than there have ever been before. But in most regions, neither new nor old homes are selling quickly. 'The resale market has finally woken up, but woken up in a bad way, meaning a lot of supply but not too much demand,' said Rick Palacios Jr., director of research at John Burns Research and & Consulting, a housing market research firm. 'It's not a shocker that home builders are very quickly re-sizing their businesses.' Read more: 2025 housing market: Is it a good time to buy a house? Builders are now cutting back after a boom period that started during the pandemic. Amid the homebuying frenzy of 2020 and 2021, they rushed to buy up land and construct new communities, especially in fast-growing, moderately priced parts of the country like the Southeast and Mountain West. At a time when older homes were scarce and bidding wars were common, the gambit worked: The S&P Homebuilders Select Industry Index surged 134% between October 2020 and October 2024, its peak. A dramatic jump in mortgage rates in the middle of 2022 cooled activity in the resale market, but builders found ways to maintain new home sales by buying down mortgage rates. If homebuyers looking at existing homes were finding rates about 7%, builders could offer temporary or permanent rate reductions to below 5% if buyers used an in-house or partner lender. They were also able to quickly adjust to market conditions by building smaller, cheaper homes. Read more: When will mortgage rates go back down to 6%? Recently, as mortgage rates and prices have stayed stubbornly high, new construction supply has begun exceeding demand. At first, inventory began to pile up in onetime pandemic relocation hotspots like Texas and Florida. But the weakness is now spreading throughout the country, Palacios said. Even builders in parts of the country like California, where housing supply is severely constrained, are now reporting a slowdown. The S&P homebuilder index has slumped 22% from its late 2024 peak. To keep homes moving now, builders are dangling bigger incentives to buyers. In Orlando, Fla., Realtor NyAsia Baker says rate buydown offers to 3.99% to 4.99% for the life of the loan are now common, when in years past those types of offers were temporary — only good for the first few years of a typical 30-year loan. Some builders are also offering up to $35,000 into so-called 'flex cash,' which buyers can apply to closing costs or upgrades, compared with $5,000 or $10,000 a few years earlier. 'Deals right now are kind of out of this world,' Baker said. She primarily works with buyers and stayed busy this spring as Orlando's market shifted in their favor. 'New construction incentives are definitely helping with that.' Many of Baker's buyers come in open to considering new builds and existing homes, but end up choosing new construction for the deals. In Atlanta, Realtor Worrell Thomas has seen a similar pattern, especially among first-time buyers who often find themselves discouraged by the high prices and stubborn sellers they find on the resale market. 'A lot of sellers right now are still stuck in the pandemic pricing,' Thomas said. Builders, meanwhile, are more willing to negotiate. 'It's definitely weak. They're throwing all types of incentives out there to attract people to purchase,' he added. Read more: How to buy down your mortgage interest rate By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy While today's supply glut and incentives can mean cost savings for buyers now, they come with more troubling implications for the country's longer-term housing supply. Housing economists estimate that the country has a shortage of somewhere between 1.5 million and 4.5 million homes. And with demand weak now, builders aren't rushing to start new construction processes like acquiring more pricey land and working with local governments to secure building permits. Housing starts plunged to a five-year low in May, to a seasonally adjusted annual rate of 1.25 million homes. Building permits, a preliminary step in the construction process, were also down. 'It's definitely not what we love to see,' said Hannah Jones, senior economic research analyst at 'In the medium to long term, we're not likely to see home prices come down much and affordability improve much on a national scale.' There's little evidence that builders will change their tone anytime soon. Builder confidence in June sank to the lowest level in over two years, with reviews of the current sales environment, sales expectations for the next six months, and prospective buyer traffic all falling, according to data tracked by the National Association of Home Builders and Wells Fargo. But for now, homebuilder pain means bigger discounts for buyers. KB Home cut the high end of its expected average selling price this year, while Lennar said its average prices had hit a five-year low. Erin Hill, 27, and her husband recently closed on a new construction home in Fort Worth, Texas. They initially looked into existing homes in Denton, where they're from, but found their budget limited them to fixer-uppers, which they hoped to avoid. After seeing new construction deals online and hearing from a friend who purchased a new build, they expanded their search into those communities, ultimately landing on a 2,100-square-foot, 3-bedroom, 2.5-bathroom home built by Lennar — which bought their mortgage rate down to 4.25% for the life of the loan, offered them free appliances and window blinds, and paid for their closing costs. "For us financially, it made the most sense," Hill said. Recently, she's been keeping track of the other homes for sale on her street to see when they might be welcoming new neighbors. She's watched some listings linger for a month or longer, and Lennar cut prices in response. "A lot of the houses on the street were up for week after week after week," she said. "They would knock the prices down and down. They just want them sold." Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance. Sign up for the Mind Your Money newsletter Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
