The trader is working on the floor of the New York Stock Exchange (NYSE) in New York City, USA on May 9, 2022.
Brendan MacDermid | Reuters
According to CNBC’s millionaire survey, US millionaires are raising cash in response to prolonged inflation concerns.
Millionaire, investigated by CNBC, ranked inflation as the greatest risk to both the economy and personal wealth. Inflation has defeated all other risks in the ranking for the first time since the survey began in 2014. According to the results, 42% of millionaires said inflation lasted “at least a year or two” and another 19% said it lasted more than two years.
The survey includes investors with more than $ 1 million in investable assets. This took place in May and surveyed approximately 750 respondents who reported that they were financial decision makers or shared financial decisions within their households. Since conducting the survey Reading consumer prices Inflation accelerated last month, S & P500 has entered the bear market20% off from recent highs.
George Walper, President of Spectrum Group, which conducts the CNBC Millionaire Survey, said: “They are not convinced that the Federal Reserve can handle these issues.”
The Federal Reserve Expected to raise interest rates There are also 75 basis points on Wednesday. Central banks also provide the latest economic outlook in the face of sustained inflation.
Studies show that millionaires are divided into the FRB’s ability to slow inflation and reduce demand without causing a recession. Thirty-five percent said they were “not at all confident” in the Fed’s ability to manage inflation, and nearly half said they were “somewhat confident.”
The Fed’s views differ primarily along the political parties. Most Republican millionaires said they were “totally unconfident” in the Fed’s ability to manage inflation, while most Democratic millionaires said they were “somewhat confident.”
More than a quarter of millionaires believe the United States is already in recession, and another 34% say the United States will be in recession this year. Only 21% said the United States was not in recession.
“They are very clearly concerned about the recession, and we will only know within six months if we are in a recession now,” Wolper said.
According to a survey, Millionaire owns about 90% of privately owned shares in the United States and has not panicked or sold so far. However, given rising interest rates, most people are raising more cash and transferring more money to short-term fixed income investments.
About 40% of millionaires say they plan to make changes to their portfolio or have already made changes due to inflation, 44% hold more money in cash and 41% have more. He said he bought a fixed rate investment. Of those surveyed, 35% said they bought the stock and 31% said they sold the stock because of inflation and the impact on certain sectors and stocks.
Wealthy investors usually take advantage of market downturns and buy first because they can afford to invest more aggressively in the event of a large market downturn. But so far, millionaires have shown little sign of buying a recent market decline, suggesting that markets and interest rates are suffering even more.
“When volatility drops and people feel we’re nearing the bottom, this is a group that moves, looks for opportunities and good value to suffer,” Wolper said. “They did it in April 2020. But we aren’t looking at it now. They aren’t seeing this end soon.”
According to a survey, 58% of millionaires expect the economy to weaken or “much weaker” by the end of the year. Also, most people expect the S & P 500 to fall by double digits. More than half of the surveyed people expect S & P to fall by at least 10%, while one in five respondents expects to fall by at least 15%.
Millionaires have also plummeted their expectations of their own return on investment — although they are still bullish on their return over the market as a whole. One in four people surveyed expects a negative return, and the majority expects a return of less than 4%.
Last year, half of the millionaires surveyed surveyed expected returns of at least 6%.