P/E MSCI World IT vs MSCI World
Tech stocks have unusually large P/E premium Source: Macrobond, TME
New Year, New Low!
After a shallow rally, Chinese hashtag#equities just made a new low. Down 15% from their peak in May last year, down 22% from their 2021 peak. Sources: Jeroen Blokland, Bloomberg
Long positioning by CTAs is extreme and creates some downside risk for the market.
According to UBS: "ES1 (sp500 futures) is already 100% long with first meaningful sell triggers @ -4% to -6%. NQ1 (nasdaq) is 92% long with first meaningful sell triggers @ - 4% to 6%". Source: TME, UBS
ENERGY STOCKS SINCE 1926 (relative to S&P)
Source: BofA, The Daily Shot
BofA Harnett: "...new 'BRICS 10’= 51% of global CO2 emissions, 46% of population, 45% of energy consumption, 45% of oil production, 37% of GDP (at purchasing power parity)…
yet <25% of global market cap, and EM equities also at 52-year low vs. US" Source: BofA, TME
One of the major risk for equity markets in the short-run is Euphoria that prevailed at the start of the year. In other words, positioning is uber-bullish and can only go down from here
As Goldman trader Cullen Morgan writes, after 9 consecutive weeks higher in the S&P (quite a rarity), sentiment and positioning in US equities is very stretched. On the positioning front, US futures length (see chart below) now stands near record highs. In past instances when non-dealer positioning has been greater than $130bn, near term returns have been strong, while returns further out (3-months to 1-year) tend to skew more negative… With the latest data at +$158bn, Goldman traders are very wary of this now being a larger headwind. Similarly, CTA positioning in US Equities is approaching 2023 highs. Bottom-line: any geopolitical or macro news (e.g too hot US jobs print) might lead to higher bond yields might might put some downside pressure on equity markets.
Correlation between Equity and Bond returns
Source: BlackRock, Ayesha Tariq, CFA
Chinese stocks are trading near all-time lows relative to GDP, while US stocks are trading near all-time highs relative to GDP
Perhaps for good reason... but that's a massive spread. Source: Swordfishvegetable
