All articles tagged with #investor caution
U.S. money market funds saw their largest weekly inflows since December 2024, totaling $66.24 billion, driven by investor caution over tariffs and trade uncertainties, while riskier equity funds experienced significant outflows.
Investors are advised to be cautious as the New Year begins with Dow futures down and bond yields rising, potentially challenging the optimism of the Santa Rally. An Apple downgrade has also contributed to shaky investor confidence. Key economic updates, including the Federal Reserve's meeting minutes and December jobs data, are expected to influence market sentiment, with strong data potentially signaling more aggressive Fed action.
Declining response rates in federal surveys measuring economic data, such as prices and job openings, are raising concerns for financial markets that heavily rely on this information to anticipate Federal Reserve policy. Former Fed economist Claudia Sahm warns that investors should exercise caution when reacting to official statistics, as the declining quality of surveys may lead to inaccurate estimates and increased market volatility. Falling response rates can increase uncertainty about the economy and result in larger-than-usual data revisions. While government statistics are still considered high quality, efforts are being made to expand sample sizes and reach out to more respondents to maintain data quality.
German sandal maker Birkenstock's stock ended more than 12% below its IPO price in its underwhelming Wall Street debut, signaling investor caution towards new listings. The shares started trading at $41, below the IPO price of $46, and closed at $40.20, down 12.61%. This marks the worst debut by a company worth over $1 billion in nearly two years. The weak performance follows the lackluster market debuts of other high-profile companies, indicating weak investor demand and questioning the valuations of these companies. Despite the disappointing debut, Birkenstock still has a market capitalization of over $8 billion, double the amount at which L Catterton acquired a majority stake in the company in 2021.
Profit margins for crypto market-making have dropped by 30% as costs increase and investors shy away from the sector following the $2 trillion market crash and the bankruptcy of FTX exchange. Market makers are now focusing on mitigating the risk of future turmoil, which is further eroding their margins.
Vetle Lunde, a crypto markets analyst at K33 Research, sees similarities between bitcoin's recent surge and its price pattern from 2018 into 2019. Lunde believes that faint signs last week that the US central bank would scale back its hawkish monetary policy amid mildly encouraging inflation data could boost market sentiment. Negative to neutral sales of derivatives, despite recent price gains, were further signs of investor caution. The rebound follows a year of distress, in which multiple major firms declared bankruptcy, sending risk-shy investors fleeing from crypto markets.
The US Securities and Exchange Commission (SEC) has issued a bulletin warning investors about the risks of investing in crypto asset securities, citing their volatility and lack of investor protections. The SEC also highlighted the need for platforms offering lending or staking services in crypto assets to comply with federal securities laws. The bulletin comes as the SEC is at odds with Coinbase, one of the largest crypto exchanges, over its business practices.