Tech troubles and VIX fear lurks

Bear of the bears

The one and only, Albert Edwards: "If I had to warn of one seismic shock for 2024 that would shake investors to their core, it is not whether the US or China does or doesn’t go into recession or if inflation and interest rates are a bit higher or lower than expected. No, the biggest surprise that could send a shockwave through portfolios is the US IT market cap bubble bursting and tipping the entire US market into a slump."

Source: Refinitiv



The Tech sector plus Alphabet/Google, Amazon, Meta/Facebook, and Tesla are now 40% of the S&P 500. Unless sector correlations drop to unprecedented lows, there is little chance a strong equity market in 2024 will leave these names behind. (Data Trek)

Tech sector as a leader

1. Tech only made the top 3 best performing sector list once from the start of the post-financial crisis bull market in 2009 through 2016. That was in 2009.

2. After 2016, the story changed dramatically and Tech was the top performing group in 4 out of the next 7 years (including 2023). (Data Trek)

Tech vs the rest

A widening gulf in earnings power between Tech and the rest of the S&P 500.

Source: Barclays


The implied bid stays alive

JPM asking the magic question...

Source: JPM


The liquidity "delta"

The rally has been "well supported" by liquidity...but where do we go from here?

Source: MS QDS/Bloomberg


Somebody is nervous

VIX continues moving higher today, despite the fact SPX has managed bouncing from yesterday's panic. The sudden bid in volatility shouldn't be dismissed. VIX hasn't closed here since November 20. Chart shows SPX vs VIX inverted.

Source: Refinitiv


Pukers are back

Blame the 0DTE crowd today again. Spotgamma adds some color: "so far -$2bn signal from 0DTE...yesterday was -$7bn..."

Source: Spotgamma


Bulls vs bear

AAII bull vs bear ratio has seen an absolutely crazy move higher since November. Chart showing the ratio vs SPX.

Source: Refinitiv


Rates - that was quick

Ackman nailed the top, outlined in our thematic email on October 23, "Rates reversing?". Fast forward to today and the 10 year is at levels most thought was impossible only a few weeks ago. The 10 year is "well" below the 200 day moving average, and RSI at levels last seen during the Covid crash.

Source: Refinitiv


Not everything is calm in Japan

The JPY continues trading inside the short term trend channel....and volatilities remain well bid.

Source: Refinitiv


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