RIP Dash-for-Cash

Guess that's why they call it a bull

1. Dow Jones Industrials closed at another all-time high and has traded green in 12 of the last 14 days

2. S&P 500 is on track for its 9th consecutive green week, which would be its longest winning streak in 20 years

3. Mega Cap Tech Stocks continue surging as the Nasdaq 100 hit an all-time high. IUXX is on track for its best year since 1999.

What happens after ATH?

"The S&P 500 has outperformed its long-term average one-, three-, six-, and 12-months later. The one-month returns are not quite as strong, suggesting a short-term overbought condition in some cases. One year latter, the S&P 500 has risen 13 out of 14 times by a median of 13.4%. If the S&P 500 can confirm the DJIA’s December 13 all-time high, it would support the case for further gains."

Source: Ned Davis


RIP "dash for cash"

It was an insane year in terms of money market inflows.

Source: EPFR



US money market funds total AUM ($5.87 T)...

Source: Bloomberg


MMF flows vs recession probabilities

There have been several instances over the last 10 years when investors have aggressively rotated out of money market funds as the probability of a recession dropped.

Source: Goldman


When MMF flows revert

The last time MMF flows really reverted (2009) was a very good time to own equities and there was a "dash-out-of-cash" for 3 years....

Source: Goldman


A "lull" in volatility

The end of a rate-hiking cycle tends to see a "lull” in equity volatility.

Source: BNP Paribas


8 cuts

"We expect three consecutive 25bp cuts in March, May, and June, followed by one cut per quarter (or every other meeting) until the funds rate reaches a terminal rate of 3.25-3.5% in 2025Q3. Our forecast implies 5 cuts in 2024 and 3 more cuts in 2025."

Source: Goldman


Paying clients

Paying clients have this week been able to read the following:

1. How truly magnificent the Magnificent 7 are

2. A deep-dive into the stretched sentiment & positioning

3. The best housing crash ever

4. If the Santa rally can continue.

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