Let’s begin our weekly wrap of Wall St strategists with the always bullish Goldman Sachs:
The number #1 incoming question to hit my desk this week: “where is all of this money coming from”? This the 3rd straight week of Equity, Bonds, and Cash, going back-to-back-to-back, inflows with literally every sub-category showing inflows. The big change in equities this week is that $ is going back into reflation trades (banks, materials, non-China EM, Europe,etc.) We are seeing no signs of FOMO (fear of missing out), but we are seeing signs of FOMU (fear of materially underperforming). Institutional positioning has decreased, while retail positioning has massively increased. There have been more inflows in the last 41 weeks (+$852 Billion) than I have been tracking fund flows for the last 18 years combined.
I posted these dates in my IB client Chat room this week as I work through September Flow-of-Funds Preview. There seems to be a wave of upcoming holidays and there is now a 2-3week window of a “pain trade higher” before clients start to trade around and hedge upFOMC risks, now nearing mid/end of September. I like Japan, non-Asia Emerging Markets, cyclical v. defensive pair for a quick move higher when “institutional clients come back from labor day” and more new ATHs posted on CNBC.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
