Just a few days after Goldman trader Scott Rubner observed last week that the market is entering the best 2-week seasonal period of the year ...
... he is out with a follow up note, in which he first points out a striking market statistic:
S&P 500 logged 7 straight trading days with a new ATH, this has only happened 5 other times since 1928. If today logs another all-time high, that has only happened 3 other times in history. No streak marked an immediate or significant top in the markets. Since 1928, if the S&P 500 is above >10% in 1H, then 2H performance is nearly 2x the median final 6 months for all years.
... but it was his observation on the rate of fund flows that was truly remarkable:
In 18 years of tracking flow of funds I could not imagine typing these large of numbers. I needed to check them twice. This was my busiest weekend and most incoming client questions of 2021 by far.
One reason for the barrage of activity is that as Rubnet explains, aside from retail, institutional activity was dead:
Positioning and sentiment is un-streched and continues to move lower, as stocks move higher. GS PB fundamental L/S Gross leverage declined on the week and is at the lowest level since last October.
This, as Rubner puts it simply, "is interesting. Investors who were “waiting for a dip” started to move to “market orders” to start July. The July money flows are strongest for the next 1-2 weeks as investors return from the long holiday week. I am watching late day large MOC imbalances to buy this week."
So here are the data that shocked the Goldman trader:
1. Global Equities logged +$517 Billion worth of inflows in 1H, for the largest inflows 1H on record. 2021 1H was 2.6x larger than the prior record in 1H 2017.
2. Q2 2021 logged the second largest inflow quarterly inflow on record (+$169B), only Q1 2021 was larger (+$348B).
3. Global Equities are annualizing +$1.035 Trillion worth of inflows for 2021...
... putting this number in context, H1 annualized equity inflows are greater than the prior 20 years!
4. The prior cumulative equity inflows over the past 9 years was +$171 Billion.
5. If we were to keep this pace for 2021, Global Equities would register 6x the total amount of cumulative inflows over the past 9 years.
6. There have been 125 trading days in 2021 or >$4 billion worth of average demand, every trading day. This is a significant dynamic in the market today. Rubner says that he will "turn more cautious (if) the supply and demand picture changes. I am expecting more of the same in 2H."
7. Finally, and as we discussed on Friday, we are entering the best two-week seasonal period of the year, at the same time 401k portfolios move back into equities for the quarter. This dynamic changes in August.