Bloomberg columnist expects outflows from US stock market

Bloomberg columnist Merryn Somerset Webb expects outflows from the US stock market, despite the S&P 500 rising 20% from its April lows, easing trade tensions, slowing inflation, and no recession in the United States. 

She notes the significant market expansion driven by inflows of cash over the last 10 years. The baby boomer generation now owns over 50% of the US stock market. Besides, foreigners were actively investing in American equities as they were rising. Hence, between 2014 and 2024, the total return to the US market was 249%.

However, Merryn Somerset Webb expects a great wealth transfer. Capgemini estimates that more than $80 trillion will pass from older Americans to their children and grandchildren before 2050, with only part of these funds staying in the market. 

Additionally, Donald Trump’s new bill would raise tax rates for individuals and companies from countries whose tax policies are considered “discriminatory” by the US. This may weigh on foreign investor interest in American assets. 

The expert also points to non-US markets becoming more attractive for investors due to a weaker dollar.