What's going on?

Data out from the Bank of America (BoA) on Friday showed that investors are fleeing US stock markets.

What does this mean?

The US has vehemently denied it�s in a recession, but the facts speak for themselves: the country already entered a �technical recession� � when an economy shrinks for two quarters in a row � last quarter. Looks like investors are choosing fact over fiction: BoA said the current mood in stock market circles is �appalling�, with investors scared off by rampant inflation, mounting interest rates, and the prospect of a long slowdown. That probably explains why investors pulled nearly $11 billion out of US stock funds in the first week of September, close to the $15 billion lost by global equity funds in the same period (tweet this). That�s the biggest mass exodus for nearly three months, and it certainly wasn�t helped by the almost $2 billion that was snatched out of particularly interest rate-sensitive tech stocks.

Why should I care?

For markets: Hope for the best, brace for the worst.
Deutsche Bank�s settled on two likely outcomes for this whole debacle. The best-case scenario sees inflation slowing down, the market floating back to its previous highs, and the S&P 500 bouncing back 20% before the year�s end. But then there�s the worst case: if the US does fall into an official recession then investors are likely to really bow out, which could send the S&P 500 down by a shudder-inducing 25%.

For you personally: Is this� a good thing?
BoA�s tailor-made �bull and bear indicator� is flashing all the way bearish right now, meaning investors are essentially the most pessimistic toward the stock market as they could be. And while that sure sounds like a bad sign, professional investors have historically seen these signals as �contrarian indicators� that could hint at an incoming rally. So in essence, all this bad news could be a blessing in disguise for you savvy bargain-seeking investors out there.