From the desk of Willie Delwiche.
Key Takeaway: The rally off of the mid-March stock market lows has equity investors feeling better. Without upside follow through (in terms of price and/or risk appetite), moods could quickly sour. So far, evidence of follow through has been lacking. Taking a longer-term perspective, the pessimism that was seen earlier this year seems more consistent with frustration that the stocks one owns aren’t going up rather than a deep-seated desire to reduce exposure and avoid equities altogether. Equity funds continue to see inflows, stocks are expensive relative to earnings and household exposure to equities has remained at historically high levels. Without these conditions unwinding, short-term mood swings may be even more sensitive to price changes than they normally are.
Sentiment Report Chart of the Week: Commodities Catching Attention![](https://media-allstarcharts.s3.amazonaws.com/wp-content/uploads/2022/04/willie04062022.png)
Commodities were the best performing asset class in 2021 and yet investors hardly noticed. Commodity-related ETF’s actually experienced net outflows last year. Commodities followed that by being the strongest asset class in Q1 2022 (posting their best quarterly gain in decades while both stocks and bonds were underwater). Now, however, investors are starting to take notice. In March, commodity ETF’s experienced their largest monthly inflows in nearly two years. Adjusted for total assets, year-to-date net flows to commodities (11% of AUM) have actually outpaced net flows to equities (3% of AUM).