Pre FOMC FOMO
The everything up market
The Monday effect lifts all volatilities theoretically, but the move higher in SPX today, accompanied with a violent move higher in VIX was interesting. Late last week, in our thematic email, Too fearless: time for some VIX calls, we outlined our logic, basically that the VIX has got too low.
Source: Refinitiv
Imagine having missed it...
YTD....NYFANG +70%, SOX +44%, SPY +13%, IWM +7%.
Source: Refinitiv
Got tech?
You are not alone any more. Investors have been forced into deploying capital into tech.
Source: DB
The supportive bids
1. Buybacks remain steady Street-wide running at $3-4/day (but blackout approaching)
2. Net Gamma positioning remains extremely supportive long ~$6n / 1% in SPX
3. Retail ended this week buying $14.5bn on MS QDS estimates (> 90 %ile vs the last 1Y and since 2016).
The only offset to the ~$30bn+ of demand was ~$8.5bn of deal supply Street-wide. (MS QDS)
Fear the FOMO still
JPM's trader Matt Reiner sums it up well: "Performance chasing has begun, but there are far too many who remain under exposed, too many managers who are underperforming, and way too many retail dollars that could potentially finds there way into the market if FOMO really starts to grip."
Discretionary...but must chase
One of our arguments for chasing this market over past months has been the "good luck explaining you are not enough long" logic. Discretionary mandates have been forced to chase this market for one simple reason, they can't explain why they are "smart" but not long. Given the magnitude of the melt up, this logic is much less attractive here.
Source: DB
Sentiment making a move
After basically being nailed to the same spot on the "risk-off" cross, this week sentiment makes a big move. Old pals VIX and AAII have contributed a lot, so hardly something that has been missed.
Source: Goldman
The implied bid "fading"
JPM's client survey has been indicating that people are not planning to increase equity exposure for months. We have been referring to this as the "implied bid". Latest update shows these people are getting sucked in as well...
Source: JPM
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