Massive capital outflows from U.S. stocks expected in August, pending election results

The U.S. stock market will experience two painful weeks back-to-back starting in early August, with large passive outflows of investor money likely to erode returns and a disappointing corporate earnings that would force systematic funds to sell stocks, according to Scott Rubner, managing director and tactical specialist at Goldman Sachs Global Markets.2024 The first half of the year saw massive equity inflows from equity ETFs and mutual funds, the The second highest on record at $231 billion, after August is typically the worst month of the year for equity inflows. Funds have already been deployed in the third quarter, and no inflows are expected in August. "Buyers are running out of ammunition and I'm watching for outflows," Rubner wrote in a report to clients on Monday. U.S. and global stock markets typically see outflows before elections and then resume inflows again in November. Hedge funds' net exposure is usually low before elections.