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RIP Dash-for-Cash

Guess that's why they call it a bull

1. Dow Jones Industrials closed at another all-time high and has traded green in 12 of the last 14 days

2. S&P 500 is on track for its 9th consecutive green week, which would be its longest winning streak in 20 years

3. Mega Cap Tech Stocks continue surging as the Nasdaq 100 hit an all-time high. IUXX is on track for its best year since 1999.

What happens after ATH?

"The S&P 500 has outperformed its long-term average one-, three-, six-, and 12-months later. The one-month returns are not quite as strong, suggesting a short-term overbought condition in some cases. One year latter, the S&P 500 has risen 13 out of 14 times by a median of 13.4%. If the S&P 500 can confirm the DJIA’s December 13 all-time high, it would support the case for further gains."

Source: Ned Davis

RIP "dash for cash"

It was an insane year in terms of money market inflows.

Source: EPFR

The MMF ATH

US money market funds total AUM ($5.87 T)...

Source: Bloomberg

MMF flows vs recession probabilities

There have been several instances over the last 10 years when investors have aggressively rotated out of money market funds as the probability of a recession dropped.

Source: Goldman

When MMF flows revert

The last time MMF flows really reverted (2009) was a very good time to own equities and there was a "dash-out-of-cash" for 3 years....

Source: Goldman

A "lull" in volatility

The end of a rate-hiking cycle tends to see a "lull” in equity volatility.

Source: BNP Paribas

8 cuts

"We expect three consecutive 25bp cuts in March, May, and June, followed by one cut per quarter (or every other meeting) until the funds rate reaches a terminal rate of 3.25-3.5% in 2025Q3. Our forecast implies 5 cuts in 2024 and 3 more cuts in 2025."

Source: Goldman

Paying clients

Paying clients have this week been able to read the following:

1. How truly magnificent the Magnificent 7 are

2. A deep-dive into the stretched sentiment & positioning

3. The best housing crash ever

4. If the Santa rally can continue.

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2 days ago at 3:38

One asset class to rule them all

109%

Magnificent 7 hit a fresh All Time High. Now up 109% for 2023. Time for a quick recap thread on how truly magnificent they are.

When I ruled the world

The Magnificent 7 have a higher weighting in the MSCI World index than all of the stocks in the UK, China, France and Japan combined.

Source: MSCI

Seas would rise when I gave the word

The Big 6 are set to add $4.83 trn of market cap in 2023 – that amount ‘added’ is larger than the current nominal GDP of every country not named the US or China ..(GS)

The biggest companies can’t possibly get any bigger…

Why not 20%....?

Source: Bilello

Tech crushing it on inflows

Globally, tech inflows are well ahead this year.

Source: Barclays

Room to buy

Allocation to technology according to FMS is only 0.3 stdev above its long-term average.

Source: BofA FMS

Hmmmm.....are you telling me this is the top?

Question: "Are you more or less inclined to be long the ‘magnificent 7’ stocks (i.e. AAPL, MSFT, GOOGL, AMZN, NVDA, TSLA and META) after their Q3 earnings reports?"

Source: JPM cross-asset survey

Very long Magnificent 7

Hedge fund exposure at record highs (but relatively...).

Source: GS Prime

Earnings drive stocks

NDX vs SPX in terms of price relative and earnings relative.

Source: Goldman

Why not 45x?

Average P/E ratio of Magnificent 7 now stands at 35x.

Source: Bloomberg

NVDA and the overbought fallacy

It’s “overbought” or “at resistance” (and expensive) and can’t possibly go any higher…

Source: Bilello

2 days ago at 9:42

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RIP Dash-for-Cash

Guess that's why they call it a bull

What happens after ATH?

Source: Ned Davis

RIP "dash for cash"

Source: EPFR

The MMF ATH

Source: Bloomberg

MMF flows vs recession probabilities

Source: Goldman

When MMF flows revert

Source: Goldman

A "lull" in volatility

Source: BNP Paribas

8 cuts

Source: Goldman

Paying clients

One asset class to rule them all

109%

When I ruled the world

Source: MSCI

Seas would rise when I gave the word

The biggest companies can’t possibly get any bigger…

Source: Bilello

Tech crushing it on inflows

Source: Barclays

Room to buy

Source: BofA FMS

Hmmmm.....are you telling me this is the top?

Source: JPM cross-asset survey

Very long Magnificent 7

Source: GS Prime

Earnings drive stocks

Source: Goldman

Why not 45x?

Source: Bloomberg

NVDA and the overbought fallacy

Source: Bilello

Today's Top Stories

Tesla Cybertruck Vs. Toyota Corolla In Real-World Crash