Bullish bears
Most bullish bear ever
We had "best recession ever" and now Mike Wilson becomes the most bullish bear ever. Mike Wilson expects near-term uncertainty to give way to an earnings recovery. For December 2024, Mike forecasts a 17.0x P/E multiple on 12-month forward EPS (2025) of US$266, which equates to a 4,500 price target ~12 months from today. Mike sees a strong earnings growth environment in 2025 (+16%Y), as positive operating leverage and tech-driven productivity growth (AI) lead to margin expansion. (Morgan Stanley)
Back to neutral
Aggregate equity positioning has bounced, now back at neutral. Imagine they start chasing this for real...
Source: DB
The tech long...
...is not that long these days. Back at neutral levels. Another "imagine they start chasing for real" set up?
Source: DB
"Inverse" fear
Who needs downside protection when the market only goes up? Skew just printed the lowest levels in a while as the SPX has surged. Previous "pukes" in skew have been marked with a short term top in the SPX...
Source: Refinitiv
10 year technicals
So far the US 10 year bounces perfectly on the bigger trend line that has been in place since the surge in rates started back in May. If this is the topping out of rates, we need to see more frustration...Watch the 50 day and the longer term trend line closely. We also ask ourselves if this is a bigger head and shoulders formation in the making? 4.5% is the line in the sand level to the downside.
Source: Refinitiv
Tech or rates...or both?
NASDAQ and rates have traded in tandem since July, but the latest gap between NASDAQ and the 10 year (inverted) has become very wide. Last time we saw a wide gap in October, equities decided to catch "down". This time the gap is even bigger...
Source: Refinitiv
Rates vs oil
Oil trying to tell rates something?
Source: Refinitiv
Rates vs breakevens
The gap between the US 10 year and 10 year breakevens remains very wide.
Source: Refinitiv
Bond convexity
We all recall the big day some sessions ago, but the CTA crowd remain big bond buyers should we see another leg higher in bonds.
Source: GS
Bond vs equity "fear"
The gap between MOVE and VIX remains very wide.
Source: Refinitiv
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