""We expect $150 billion of liquidity injection by March-end, as 64% of tax returns get issued. Additional savings from bigger tax returns (~$820 on average), especially for the high-income consumer (~$9K for the top 1% of earners), will flow back into equities," the analysts advised clients. "Historically, March has been the strongest month for equity ETF and mutual fund inflows. March and April have also been strong months for the personal savings rate.""
""Kwon calls this phenomenon the "Return of YOLO," because it is coupled with an increase in speculative buying among younger traders on platforms like Robinhood and Schwab. Kwon argues that the proxy for that speculation is the rise in options trading, as opposed to traditional buy-hold-sell retail investor behaviour. "Speculation picks up with bigger savings [and]...~25% of retail activity is in options now," he wrote.""
An estimated $150 billion of liquidity will be injected into the stock market by the end of March as 64% of tax returns are issued. Such a buy signal has historically preceded S&P 500 gains 100% of the time, averaging about 13% over the following six months. Average additional tax refunds are roughly $820 overall and about $9,000 for the top 1% of earners, with those savings expected to flow into equities. March typically shows the largest equity ETF and mutual fund inflows and stronger personal savings rates. Domestic liquidity fell $105 billion since mid-January but seasonality should turn positive through March-end, likely triggering a buy signal. Retail speculation has risen, with options trading now accounting for about 25% of retail activity and equity options volume surging since 2020.
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