Bank of America

Zuckerberg's Recent Hires Tell Us A Lot About His Worldview And It's Not Good

"All of this proves that Mark Zuckerberg has absolutely no creativity or genuine insight when it comes to political thinking. He runs straight to the same neoliberal strategists and corporate Democrats that Americans are sick and tired of, and offers nothing new other than a technocratic face on a failed and expired political class. Ten million cross country road trips to Iowa will never alter this reality."

Credit Investors Are Suddenly Extremely Worried About Central Banks

The latest credit investor survey by Bank of America shows a marked change in the Wall of Worry: "Quantitative Failure" by central banks has emerged as investors’ top concern (23%), up materially from June’s reading (6%). Investors say that a backdrop of the ECB ending QE next year, while inflation remains sub-par, "has the potential to rattle the market’s confidence."

Earnings Beat "Fist Pumps" Very Muted This Quarter

"...shares of companies that have reported both better-than-expected profits and sales for the second quarter have barely budged this earnings season. It’s the least fist-bumping investors have done for great quarters in 17 years."

Bears Throw In The Towel: FANG Shorts Hit All Time Low

The FANG bears have capitulated: short interest for the four companies has sunk to a new record low, and collectively the short bets against FANG stocks accounted for just 2% of their traded shares, an all time low.

How Passive Investing Distorts Earnings Season

Over the past seven quarters (including the 2Q earnings season so far), stocks with high passive ownership that missed on EPS and sales have underperformed those with low passive ownership by 1.5ppt on average during the following day, and the spread has widened significantly during recent quarters.

SocGen: "Low Vol Can Misprice High Yield By Up To 30%"

"High confidence as to what an asset is worth can lead to underestimating the potential downside risks, which happens almost mechanically in high yield debt markets where asset volatility informs part of the pricing model. The implication is that high yield credit could be 30%+ mispriced as and when volatility moves back to average."

Zombie Corporations Litter Europe, Kept Alive By ECB

"The citizen does not benefit from the zombification of the economy. The citizen pays for it. How? With the destruction of savings through financial repression and the collapse of real wage growth. Savers pay for zombification, under the mirage that it 'keeps' jobs..."

Bank of America: "Tick Tock"

In "Tick Tock", BofA's Michael Hartnett doubles down on his recent gloomy forecast that "positioning is becoming more consistent with autumn top in risk assets", and now expects the market to crack some time in August.