Wall of Worry

What Wall Of Worry? Goldman Finds Investors Are "Unusually Bullish"

In the context of the acceleration in the equity rally over the past two months, index option positioning is evidence of a crowded equity market and a negative sign for stocks over the next month. Following similar positioning over the past five years, returns were -1.9% below average in the subsequent month.

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."

Even Schwab Is Warning Retail Clients Of "Danger Signs Rising"

"A solid earnings season should contribute to a continuation of the bull market in stocks. Dangers are lurking, however, and the possibility of a decent-sized pullback has grown over the past couple of months, in light of monetary policy and geopolitical uncertainties. "

No More "Cash On The Sidelines": Private Client Cash Levels Drop To Record Low

According to the latest BofA flow show report, private client cash - i.e., high net worth individuals who still allocate capital to single-stocks and ETFs on a discretionary basis - is now at a record low, taking out the cash levels observed in the period just prior to the last market peak in 2007.

The Blow-Off Top Is Here: Second Largest Weekly Inflows To Wall Street In History

For confirmation that the market is now in its "blow off top" phase, look no further than the latest BofA "flow show" in which Michael Hartnett reports that capital markets just saw their biggest week of equity inflows since the US election ($24.6bn), another chunky inflow to bonds ($9.0bn), which combines to "the second largest week of inflows to Wall Street ever (largest was $35.5bn in Dec'2014)."

As Stocks Sink, This Is What RBC Is Looking For

"...reticence from the buyside to take-down ‘net length’ is beginning to sting as recent ‘hiding-places’ are now dragging and generally very ‘high beta’ long portfolios (crowded ‘market’ factor) means increasingly painful drawdowns."

Weekend Reading: Markets May Be Getting Expensive

"This leaves markets with the “hope” trade in peril as Congress continues to trip itself up in moving its legislative agenda forward while, at the same time, the Fed has accelerated the pace of monetary tightening and sending clear warnings to the markets...This has “bad” written all over it."