BofA survey reporting Fund Managers are net *underweight* Cash for the first time since 2011... "Cash is Trash" ImageTo be fair, we can think of at least 2 asset classes which are probably better bets than cash as defensive assets (and maybe 2-3 others for those with a long/short latitude)https://twitter.com/topdowncharts/status/1780347938067116292

As geopolitical risk looms, bonds — typically a safe haven defensive asset, which typically rally in times of risk and uncertainty — are… getting further sold-off.There’s two reasons for this: 1. Further flare-up and escalation in the Middle East geopolitics is likely to push up oil prices, inflation, and bond yieldsbut perhaps more important; 2. The main underlying current is one of reacceleration and inflation resurgence risk, and that is setting the tone and arguably speaking louder than the evolving geopolitical risk backdrop.We saw a shot across the bows last week on this with the stickier than expected underlying inflation measures… meaning that all those expected Fed rate cuts everyone was looking for are as a minimum going to be smaller and later than expected, and the tail risk is

Your equities view/positioning is (primary reason in brackets): $S&P 500(.SPX)$ $NASDAQ(.IXIC)$ $DJIA(.DJI)$ [Bearish = rising yields] [Bullish = falling yields]Bullish (Fundamentals)23.3%Bullish (Technicals)16.3%Bearish (Fundamentals)37.9%Bearish (Technicals)22.5%Equity survey net bearishImageYour *bonds* view/positioning is (primary reason in brackets): Bullish (Fundamentals)34.4%Bullish (Technicals)9.4%Bearish (Fundamentals)42.9%Bearish (Technicals)13.3%Bond survey also net bearishImagehttps://twitter.com/Callum_Thomas/status/1779095631346409507

Gold volatility has ticked up, but no where near previous extremes --> Room To RunThe time to fade the breakaway in gold or get cautious is when volatility spikes (which indicates exhaustion of the move (basically fear and/or greed expressed in the options market)) -- not yet. $Gold - main 2406(GCmain)$ $VanEck Gold Miners ETF(GDX)$ $SPDR Gold Shares(GLD)$ Imagehttps://twitter.com/Callum_Thomas/status/1778689690029457782

Image3 Key Factors are going to determine the path of that chart above...Global: Reacceleration vs RecessionChina: Stimulus vs DownturnThematics: Capex boom1）On Reacceleration vs RecessionRecently seeing more evidence for the former-leading indicators turning up-manufacturing PMIs rebounding-global trade volume recession endingBasically we are seeing a good old fashioned hard cyclical upturn, bolstered by the inventory cycle2）On China Stimulus vs DownturnIt's complicated:-the property downturn remains entrenched--this is not good for commodities-but: a pain point seems to be activated--February saw a -50bp RRR cut and -25bp rate cutStimulus is coming...3）On ThematicsA multi-pronged Capex Boom is underway-clean energy transition and EVs-infrastructure investment-reshoring and factor buildin

Equity survey down notably, but still just net-bullish $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ ImageYour equities view/positioning is (primary reason in brackets):Bullish (Fundamentals)31.2%Bullish (Technicals)19.9%Bearish (Fundamentals)29.5%Bearish (Technicals)19.3%Bond sentiment further net-bearish as higher for longer risk rises, Fed rate cut probability fallsImageYour *bonds* view/positioning is (primary reason in brackets): [Bearish = rising yields] [Bullish = falling yields]Bullish (Fundamentals)32.9%Bullish (Technicals)6.6%Bearish (Fundamentals)48.1%Bearish (Technicals)12.3%https://twitter.com/Callum_Thomas/status/1776751138571976982

Chart of the Week - The Calm US high yield credit spreads have dropped down to the bottom end of the range, and likewise equity volatility has been lulled into slumber... And fair enough, the macro backdrop has improved, financial conditions have eased, and sentiment has been overwhelmingly bullish as stocks move up to the right. It echoes what I recently noted with Emerging Markets, where the composite risk pricing indicator (EM credit spreads, sovereign CDS pricing, equity volatility, and FX volatility) was approaching a record low. There is definitely an upside from The Calm: it can form a self-reinforcing feedback loop where lower volatility enables confidence effects; a more bullish mood, which plays out in higher asset prices, cheaper and more freely available funding. BUT It also in

Chart of the Week - Where's the Value? "past results are not indicative of future returns" The other day I showed a chart of the combined relative price performance line of Global Small Value stocks vs US Large Growth stocks. In case you didn’t see it, the picture is one of a 17-year long relative bear market... US Large Growth has outperformed Global Small Value more than 5x over that period. Global Small Value sure must suck, right? Well, one consolation is a relative value trinity has emerged… Small vs Large, Value vs Growth, Global vs US are all now trading at steep relative value discounts, as the chart below shows. Investment product advertisements are always littered with “the past does not equal the future“ disclaimers, but in our context here those words actually mean something… I

Your *bonds* view/positioning is (primary reason in brackets): [Bearish = rising yields] [Bullish = falling yields]Bullish (Fundamentals)39.6%Bullish (Technicals)10.8%Bearish (Fundamentals)39.3%Bearish (Technicals)10.3%Bond survey near perfectly neutral - bulls n bears looking in the mirror on technicals and fundamentalsImageYour equities view/positioning is (primary reason in brackets):Bullish (Fundamentals)33.3%Bullish (Technicals)27.2%Bearish (Fundamentals)26.8%Bearish (Technicals)12.8%Back to net-bullish this week $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ Imagehttps://twitter.com/Callum_Thomas/status/1771662965156061400

Here it is, the run-off of the top pick of each of the previous 4 surveys on favored value metric...What is your preferred Stockmarket Valuation metric? $S&P 500(.SPX)$ $Spectrum Rare Earths Ltd(SPX.AU)$ $NASDAQ(.IXIC)$ $DJIA(.DJI)$ What is your preferred Stockmarket Valuation metric? (1/4)Trailing PE12.4%Forward PE60.3%CAPE/Shiller PE21.5%Price to Peak-Earnings5.9%What is your preferred Stockmarket Valuation metric? (2/4)PEG Ratio47%Price to M27.9%Market Cap vs GDP17.7%Pure price mean reversion27.4%What is your preferred Stockmarket Valuation metric? (3/4)Price to Cash Flow47.6%Price to Book Value13.1%Price to Sa

My EM risk pricing indicator has dropped to one of its lowest readings ever — in other words a deep sense of calm and complacency has taken hold. This kind of serenity and tranquility is great if you’re at a health spa or on vacation, but in markets it can be a dangerous contrarian signal. But what exactly are we looking at here, and is it actually a bad thing? The indicator below takes the average z-score of Equity implied volatility, FX implied volatility, EM corporate credit spreads, and 5-year sovereign CDS pricing. So it’s a fairly holistic and cross-asset snapshot of risk pricing sentiment for Emerging Markets. It spikes during times of stress and panic. It drops when things are improving, sentiment is bullish, and markets are calm. And well, things have actually been improving for e

Bond survey meanwhile neutral, stuck in the middle of various macro-sentiment cross-currentsImageYour *bonds* view/positioning is (primary reason in brackets): [Bearish = rising yields] [Bullish = falling yields]Bullish (Fundamentals)35.5%Bullish (Technicals)14.7%Bearish (Fundamentals)38.5%Bearish (Technicals)11.3%Equity survey most bullish since Dec 2021 $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ ImageYour equities view/positioning is (primary reason in brackets):Bullish (Fundamentals)33%Bullish (Technicals)29.7%Bearish (Fundamentals)26.1%Bearish (Technicals)11.2%https://twitter.com/Callum_Thomas/status/1763917178687144180

Chart of the Week - Giddy Index Investors Index investors are perhaps unwittingly piling into tech and shunning defensives... This chart may come as a surprise — maybe a shock — to those chilling in index funds. Before we dive into the detail and implications of the chart, the key thing to remember is that index investing is not passive, it is an active strategy administered by index companies where in the case of a market cap-weighted index, the *strategy* is to “just buy the biggest stocks“. Given the cheap cost (and success) of this simple strategy, it has become the most popular way of investing in stocks by fund investors (with passive funds taking the dominant share of total funds under management and net new flows). It’s a strategy that works well in winner-take-all trending market

Your *bonds* view/positioning is (primary reason in brackets): [Bearish = rising yields] [Bullish = falling yields]Bullish (Fundamentals)34%Bullish (Technicals)8.8%Bearish (Fundamentals)46.1%Bearish (Technicals)11.1%Huge change of heart on bonds... HFL?ImageYour equities view/positioning is (primary reason in brackets): $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ Bullish (Fundamentals)26.1%Bullish (Technicals)19.8%Bearish (Fundamentals)33.9%Bearish (Technicals)20.3%Back to bearish this week...Imagehttps://twitter.com/Callum_Thomas/status/1758959128796647864

Your equities view/positioning is (primary reason in brackets):Bullish (Fundamentals)27.1%Bullish (Technicals)28%Bearish (Fundamentals)32.9%Bearish (Technicals)12%equity sentiment remains net-bullish $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ ImageYour *bonds* view/positioning is (primary reason in brackets): [Bearish = rising yields] [Bullish = falling yields]Bullish (Fundamentals)45.8%Bullish (Technicals)12.5%Bearish (Fundamentals)33.6%Bearish (Technicals)8.1%bond survey also still net-bullishImagehttps://twitter.com/Callum_Thomas/status/1756791452695433514

Valuation Signals for Asset AllocatorsFrom an active #AssetAllocation or #MultiAsset investing standpoint, it is critical to develop valuation indicators for each asset class to identify moments of extreme risk...Here's a case study -- that rare moment in 2022 when both stocks AND bonds fell materially: shattering at least temporarily the 60/40 investing paradigm.This was preceded by *both* stocks and bonds showing up as extreme expensive in 2021 – something that has not happened before, and something that conceptually should be very rare given the differing drivers for each asset.In that instance, you could have effectively considered cash as "cheap" by comparison, especially given the combined 60/40 portfolio view of valuations rising to one of the most extreme expensive readings on reco