Global Trade Wars Rock Investor Confidence

6/3/2019

 

Spectrem Millionaire Investor Confidence Index (SMICI®) = 6

  • April 2019-May 2019  - Down 2
  • May 2018-May 2019  - Down 2

Spectrem Affluent Investor Confidence Index (SAICI®) = -1

  • March 2019-April 2019 – Down 3
  • April 2018-April 2019 - Down 7         

 

  • The impact of ongoing and stalled trade talks with China seems obvious as the Spectrem indices fell in May. The SMICI dropped 2 points to 6, as it bounces back and forth based on global trade war progress. THE SMICI, which spent nine consecutive months in double digits in 2017, has been in single digits eight of the last nine months.
  • The SAICI fell by 3 points to -1, returning to negative territory after three months in positive range. The SAICI has been in negative numbers for four of the last seven months.
  • Stock investing fell among all investors in May, but all other investing products saw a gain in interest, most notably in individual bond investing, which doubled from the previous month to 11.20, a seven-month high.
  • Millionaire investors showed much more confidence in May than did non-Millionaires. The wealthier investors recorded increased confidence in all investing categories except stocks, and interest in individual bond investing rose from 3.9 percent of Millionaires to 15.4 percent. Notably, cash investing rose to 30.9 percent, the highest rate for that safety category since August of 2012.
  • Among non-Millionaires, stock investing fell to 15.8 percent, the lowest among those investors since January and the fourth month in the last seven in which less than 20 percent of non-Millionaires looked to add to their stock investing.
  • Investors not investing, those who do not plan to extend their investing totals over the coming month, rose among non-Millionaires to 53.5 percent, the highest rate since December. Among Millionaires, however, those not investing fell to 28.7 percent, after a big jump in April.
  • The Spectrem Household Outlook among all investors improved slightly to 22.80, its highest level since September. However, the Outlook among individual components remained flat with the exception of the economy, which rose from 1.20 to 3.60 in the month of May.

The back-and-forth between the United States and China regarding trade restrictions and tariffs ramped up in May, and investors watched the lack of progress with great interest. Statements, both positive and negative, from U.S. President Donald Trump and Chinese President Xi Jinping caused the stock market to bounce one way or another, and investor confidence was affected almost daily.

In the month of May, both the Spectrem Millionaire Investor Confidence Index and the Spectrem Affluent Investor Confidence Index recorded slight drops, indicating a continued concern among investors about the long-term stability of the stock market results. The SMICI dropped 2 points to 6 as fewer investors showed an interest in investing in individual stocks. The SAICI fell back into negative territory from 2 to -1, and has not been above a register of 4 since September of 2018.

The monthly SAICI tracks changes in investment sentiment among the 17 million households in America with more than $500,000 of investable assets. The SMICI reflects the investment sentiment of households with more than $1 million in investable assets. In May, the Spectrem Confidence Indices were fielded from May 17-May 23, 2019. During that time, the Dow Jones Industrial Average stayed above 25,500, although it recorded a loss of more than 300 points total on the last two days of the fielding period.

While both indices recorded losses, among all investors there was an increased interest in investing in all categories of products other than individual stocks. Interest in individual bonds more than doubled from 5.20 to 11.20.

However, there was a huge jump in cash investing among Millionaires investors, as from 22.5 percent to 30.9 percent of investors who increased their investing in cash products. Joined with the increase in bond investing, from 3.9 percent to 15.4 percent among Millionaires, there seemed to be an increased interest in the less volatile investment products.

Among non-Millionaires, investing interests were similar to levels in April, although individual stock investing fell sharply from 22.3 to 15.8 percent. Those not investing, the investors who express no plans to add to any allocations, rose to 53.5 percent, the highest level since December.

Spectrem’s Household Outlook, a measure of the long-term confidence among investors in four financial factors which impact a household’s daily life, rose slightly in May, but the Outlook has barely moved in the last four months after it nearly doubled from 10.90 to 21.10 in February. The Outlook appears to be both stable and unaffected one way or the other by current economic conditions. The Outlook for the economy among all investors rose from 1.20 to 3.60, a positive sign after spending five months in negative territory from October 2018 to February 2019.

 

 

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