Bull Crash: Record-Breaking Exodus of Big Money from U.S. Stocks

The past month has been a wild ride in the United States. The White House is engaged in fights over trade and taxes; the Federal Reserve is at war with inflation, and the stock market swings like a pendulum, losing around $5 trillion in value over three weeks. To top it all off, big money is leaving U.S. stocks at a pace never seen before. A new survey from BofA Global Research shows that investors have cut their U.S. stock holdings more than ever. The shift is so big that some experts call it a “bull crash.”

So, what’s driving this great escape? The fear of stagflation – slow growth and high prices – makes investors nervous. Many are also worried about trade fights with China and Europe. And there’s a growing belief that the golden age of U.S. stock outperformance might end.

But Where’s The Money Going?

Instead of keeping their cash in the U.S., investors are spreading it around. One big trend is the move into cash, with holdings rising from 3.5% to 4.1%. That may not sound like much, but we’re talking about a lot of money in a market this size.

Another major winner is Europe. For the first time since 2021, eurozone stocks are seeing big inflows. Investors seem to see better value in European companies. They also expect stronger earnings growth, helped by government spending in places like Germany.

The Sectors and Companies Benefiting

So, who benefits from this allocation of equity? Banks are at the top of the list. European lenders like Deutsche Bank (DB) and BNP Paribas (BNPQY) are getting more love from investors. In fact, higher interest rates in Europe are helping banks make more money.

Defense stocks are also surging. With the war in Ukraine dragging on, countries are spending big on their military. BAE Systems (BAESY) and Rheinmetall (RNMBY) have been among the biggest winners, with European defense stocks up nearly 70% this year.

Healthcare is another safe haven. Companies like Novo Nordisk (NVO) and Roche (RHHBY) are seen as stable bets in uncertain times.

What’s Next?

The big question now is whether this shift is here to stay. Some say the pullback in U.S. stocks is just a short-term dip before a rebound. Others believe this is the start of a bigger trend away from U.S. dominance. Either way, the investing world is changing fast, and savvy investors are keeping their options open.

Tipranks’ Comparison Tool

Using Tipranks’ comparison tool, we’ve compared all the European companies mentioned in the article to gain a wider perspective of their financial standings and the companies fundamentals.