Tax season—and extra particularly tax returns—will inject an additional $150 billion into the inventory market by the tip of March, in response to estimates by Wells Fargo. When a ‘buy’ sign like that arrives, the S&P 500 goes up 100% of the time, by a median of 13% over the following six months, in response to analyst Ohsung Kwon and his colleagues.
“We expect $150 billion of liquidity injection by March-end, as 64% of tax returns get issued. Additional savings from bigger tax returns (~$820 on average), especially for the high-income consumer (~$9K for the top 1% of earners), will flow back into equities,” the analysts suggested purchasers. “Historically, March has been the strongest month for equity ETF and mutual fund inflows. March and April have also been strong months for the personal savings rate.”
“Domestic liquidity is down $105 billion over the past four weeks, since the peak in mid-January, due to tax seasonality. But the seasonality is about to turn positive, at least through March-end, likely triggering a ‘buy’ signal on our Liquidity Indicator.”
March has traditionally seen the most important inflows of funds into the markets.
Kwon calls this phenomenon the “Return of YOLO,” as a result of it’s coupled with a rise in speculative shopping for amongst youthful merchants on platforms like Robinhood and Schwab. Kwon argues that the proxy for that hypothesis is the rise in choices buying and selling, versus conventional buy-hold-sell retail investor behaviour.
“Speculation picks up with bigger savings [and]…~25% of retail activity is in options now,” he wrote. “Retail investors have become more speculative, especially since COVID. Equity options volume has surged since 2020 and derivative trades now account for about a quarter of popular retail brokerage platforms like Schwab and Robinhood.”
One one that agrees with him is President Trump, who posted on social media final night time, “Tax Refunds this year, because of ‘THE GREAT BIG BEAUTIFUL BILL,’ are substantially greater than ever before. In some cases, estimates are that over 20% will be returned to the Taxpayer. So, when you get your Tax Refund, think about what a wonderful President you have — NO TAX ON TIPS, NO TAX ON SOCIAL SECURITY FOR OUR GREAT SENIORS, NO TAX ON OVERTIME, INTEREST DEDUCTIONS ON CAR LOANS, AND MUCH MORE. Don’t spend all of this money in one place!”
Kwon is correct concerning the ebb and stream of liquidity in equities this 12 months. The S&P 500 has been a curler coaster for the reason that starting of January.
And volatility—as measured by the VIX “fear” index—has trended up all 12 months too.
Right here’s a snapshot of the markets this morning:
- S&P 500 futures have been up 0.54% this morning. The index closed flat up 0.10% in its final session.
- STOXX Europe 600 was up 0.93% in early buying and selling.
- The U.Ok.’s FTSE 100 was up 1% in early buying and selling.
- Japan’s Nikkei 225 was up 1%.
- China’s CSI 300 is closed for Chinese language New Yr.
- The South Korea KOSPI is closed for Chinese language New Yr.
- India’s NIFTY 50 was up 0.37%.
- Bitcoin declined to $67.4K.
Be part of us on the Fortune Office Innovation Summit Might 19–20, 2026, in Atlanta. The following period of office innovation is right here—and the previous playbook is being rewritten. At this unique, high-energy occasion, the world’s most modern leaders will convene to discover how AI, humanity, and technique converge to redefine, once more, the way forward for work. Register now.
