Hey it’s Kieran! I hope that you had a great weekend and are looking forward to getting back into the markets this week. I’ll hopefully speak to you in the Traderseed programs, and as ever, if you have any questions, just contact me let me know. With that said, let’s get started!
Weekly Watchlist
With global markets continuously repricing based on interest rate expectations, upcoming inflation data from the US and the Eurozone will hit the tape on Thursday. In the US it will be the Fed’s preferred inflation gauge, the personal consumption expenditures price index, whereas the Eurozone will deliver CPI numbers the same day. Elsewhere, OPEC+ meets on Thursday to discuss oil output cuts, and PPI data from China will give fresh insights on the economic outlook for the world’s number-two economy.
The Macro View
No Fear in the markets. Over the last 5 years (1,260 trading days), the VIX (where the big books hedge) has only closed at the same or lower levels as Friday on 25 trading days (2.0% of all days).
No fear brings major inflows. We have just seen the biggest 2 week inflow to equity funds since February 2022.
Retail catching FOMO and loading up. The market is forcing people to chase the rally. JPM derivatives strategy team points out: “Retail investors net bought +$4.8B of cash equities this past week, +2.3 standard deviations above the last 12M average and the highest weekly inflow recorded since April 2022”. Not the stuff you see at lows.
BofA’s Fear & Greed index no longer at a buy signal…but far from contrarian sell. Plenty more room to run.
Cash is king. BofA’s client holdings. Nothing new, but imagine the huge cash pile starts feeling the equities FOMO…
Gold mania. TD on the Chinese gold accumulation: “…top gold traders in China have just added nearly 17.5 tonnes of notional gold to their books over the last week. Our tracking of the top traders in Shanghai points to a massive accumulation of gold.” 2000/2010 is the massive area to watch. Flag before the break out higher, or a double top?
Inflation is back to tolerable levels in the major economic areas. We are starting to see more cuts then rate rises from global central banks and with such little fear in the markets, it truly feels we are very much max “risk-on” again.
I hope you found this interesting and useful. As ever, keep your risk management top of mind, trade safe, and stay nimble out there.
Have a good week!
Kieran
www.traderseed.io
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