Stocks rallied 75 points today to close at 18,161. Trading volume was heavier on the day with tech and healthcare sectors leading the way higher thanks to strong earnings reports.
The Bank of America/Merrill Lynch fund manager survey showed that cash levels in funds run by money managers has risen to 5.8%. High cash levels like this indicate that gurus are taking risk off the table and this level has only been seen twice before with one being post 9/11 and the other occurring right after the Brexit vote. According to the survey, top risk events facing money managers are 1) the European Union falls apart, 2) a global bond market crash, 3) Donald Trump, 4) Rising inflation and 5) owning a Samsung Galaxy 7. Just prior to the housing crisis in 2007, fund cash levels hit lows of about 3.5% and then during ‘08 and ‘09 they rose to 5.5% before falling back to 3.5% when things settled out. Since 2013 however cash levels have risen steadily as unprecedented monetary intervention and slowing global growth have made investors more wary than a kindergardener in a haunted house.
The nation’s largest insurer, United Health, posted solid Q3 numbers today citing a drop in medical costs as a percentage of premiums coupled with strong growth in its Optum health services unit. Revenue was up 12% and net income was up 23%. The company increased its forward guidance partly because they will exit the bulk of their current 35 state exchanges this year thereby reducing the cost drag coming from ACA compliant policies.
Gold was up $7 an ounce as the US dollar pulled back from a 7 month high.