the flip flop...

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Barclays 기준 기관 포지셔닝이 공매도 축소·기술주 중심 위험 재진입으로 정상화 중. 뮤추얼펀드 주식 순유입 2월 이후 최고, 옵션 수요 1년 내 최고. 현금·채권 자금 유입은 여전히 높아 과열은 아님. 실적 시즌 앞두고 변동성 가능. Morgan Stanley는 고용 시장이 연착륙 지지하며 실업률 6%는 과도하다고 봄, 임금이 물가에 미치는 영향은 미미하다고 평가. 진행자는 강세 전환 기류를 인정하되 확신은 없다고 말함.

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01. so what's going on with the big bangs like Barclays and Morgan Stanley and not the Mike Wilson bear we already know he's a bear over at Morgan Stanley what are the uh primary researchers at the institution suggesting well here's the latest from Barclays and then we'll get into Morgan Stanley they have different looks uh at the current economy but take a look at this fomo folks fomo fomo has seen frustrated bears turning into reluctant Bulls you know this reminds me of just a week or so ago we covered a TS Lombard piece where T.S Lombard said look we're bears but we're buying because stocks are going up and I thought that was rich I'm like wait what you're positioning into stocks even though you're bearish because stocks are going up and you're afraid they're going to go up even more like if I said that on YouTube I'd get chastised like I already get chastised if I just say what I'm going to do and I'm fully transparent about it but but to say I'm a bear but I'm gonna go long blows my mind if people will say that but that's true that's what's been happening and so uh Barclays is picking up on this and so they're talking about position normalizing uh and uh risk basically is spreading out uh throughout stocks within uh the U.S economy uh especially uh to some extent in the U.S uh or sorry mostly in the U.S whereas in the EU and the UK you still have a lot more defensive positioning so what does that mean well let's look into this most investor types have bought equities over the last month mutual fund Equity inflows were the highest level in June since February as uh private money a move to neutralize some of their long-standing under weight so in in other words you've got this uh uh this remember the Bank of America survey where we had somewhere around uh you know a 32 underweight from fund managers for equities where you're starting to get that flip-flop that's finally starting to happen and here you see low volatility has allowed a certain systemic strategies to continue re-risking and hedge fund betas to equities nudge up okay in English basically hey look volatility is so low you could still buy your bearish puts but just go long equities as well and that's somewhat what we're starting to see happen on top of this AI frenzy bringing in retail investors and listen to this who had stayed on the sidelines for most of the Year ah depressing it always seems like that's how folks Miss uh some of the best returns of the market is by waiting for like a royal invitation to get back in getting back in is the hard part you know you either get in too early or you get into it late it's very difficult to be perfect on out perfectly and imperfectly anyway amongst all this we note short Equity future Physicians have been trimmed adding to the sense of degrossing Slash going back up towards Benchmark Equity weight in other words balancing out going back to all right we gotta have stocks at a normal position in our portfolio all right what else we have about cash here hold on one sec sorry I still got this still got this nagging cuff and cold but don't worry it's not going to stop that beautiful sexy lecture release this weekend or that price going up tomorrow night for all or the income how to make more money and get sh9t done faster of course featuring AI really good lectures by the way a lot of good compliments coming out of that one so what do we have here despite the latest buying spree and Equity overall positioning is balanced at best see a lot of folks and I see this regularly anytime you have this uh crash in a market and then you have a little bit of a recovery the first thing the Bears do is say oh it's just a bear Market rally like this is just the beginning before we leg down again the problem is that's how they end up having an excuse to stay on the sidelines well the issue then is when we continue to actually go up their excuse starts weighing down and you start going all right so like how are you gonna position now well apparently most new money is still going into cash and bonds listen to this X asset flows which basically means you know where's the money going are mostly new money or is mostly being directed to the bond market and money market so let that sink in for a moment if somebody comes upon new money so you know they sell a house let's say and they've got 200 Grand uh you know from Equity from selling their home where is most of that money well more than 50 of it is still going into Cash via bonds or money markets this is a way of suggesting that you're nowhere close to the days of Tina where everybody's like throw everything you have into the stock market and you have the Euphoria of November of 2021 you're nowhere close to that because of positioning today which is actually bullish that's fantastic anywho positive EPS revisions have provided fundamental support to equity inflows but stand in contrast to mixed economic or activity data therefore the upcoming earnings season maybe Make It or Break It for stocks we've talked about this as well that you would expect some pre-positioning going into this Q2 earnings season and I think that's why we've seen some volatility over the last few days where we've had quite a few red days and by quite a few red days I mean like four and because of not only some end of the quarter rebalancing but also hedging going into earnings all right fine what else Tech is driving Regional Equity flows all right well we kind of knew that uh that's U.S investors however are starting to sell their European equities for the first time this year now this I found interesting I've been saying probably for just quite frankly a few years now get me out of Emerging Markets I don't want Emerging Markets I don't want the S P 500 I want Tech chips and Innovation I don't care about the rest of the world going through this crisis I think the us is going to weather at the best and you're finally actually getting rotation uh from us investors dumping their foreign crap and getting more properly positioned in U.S stocks good uh and that's probably because Europe is feared to actually go into the recession or a recession whereas the U.S May Dodge it outflows from UK stocks continue unabated amid A Renewed stagflation worries yeah especially with that spike in inflation over there uh Japan continues to see strong inflows I'm not sure why but anyway Tech inflow's masked uneven sector Trend positioning on banks cut sharply Global flows have been going predominantly into Tech but active manager performance in Europe have taken a hit as value slash cyclicals have fared better in Europe so in other words for Europe value stocks America Tech baby Tech exposure has quickly moved to above average for hedge funds that's true but not yet for your typical investment advisors keep in mind that's different from a hedge fund a hedge fund pretty much anybody can make a hedge fund you don't have to be licensed to create an hedge fund hedge fund is just sort of like yo I got fun accredited investors give me your money and I'll I'll trade with it that's basically a hedge fund that's different from like an ETF where you position into specific stocks with a specific predetermined strategy that's transparent uh and it's different from a financial advisor actually sitting down with somebody personally and giving them Financial advice I've never done that uh you know even though I'm a licensed financial advisor I got my license for my ETF but um but anyway so what else do we have here lower Equity volatility May persist through the summer fine all right boring uh some of this is somewhat insightful though okay frustrated Bears have become reluctant Bulls over the last month mutual funds resumed buying equities for the first time since February now that's a big deal mutual funds buying that's great a lot of the uh the folks with money um they still put money in the mutual funds I don't know why I don't know why you put your money into a mutual fund instead of instead of an ETF I literally cannot find a single reason why you would do that what people still do and the fees are a lot higher anyway the tax benefits aren't as great talk to a CPA anyway the bigger year-to-date picture is unchanged with most it flows going to Safe assets and the flows to equities may prove fleeting and they always say that anyway last week Equity flows turned negative again on hawkish uh Central Bank talk and weak data but it's noteworthy that equities were being bought despite the negative economic data yep that is a style of going risk on all right great what else so uh here's the bull bear indicate index mostly positive now since the start of 2020 uh two or the most positive since the start of 22.

02. you can see here at the end of 2021 you really got this big decline and that really started moving up again at the beginning of 2023. fantastic okay so we got Morgan Stanley to look at in just a moment as well but I like looking at this here high frequency data like retail call option buying has moved up sharply to the highest level in more than a year uh I I generally prefer buying shares just because remember with timing the market uh when you're doing options you're really timing it two times if not three times because you're timing the buy and then you're determining how long to hold and then you're determining close and then do you roll the option or do you go to shares there's there's a lot that could go wrong whereas if you just buy shares and the stock goes up boy it's a lot less stressful and and you know selling calls in a Nike Swoosh environment is risky uh although some people look and go hey you know made good money this year so far why not fair fine but then again you know the crazy thing is the year has almost perfectly aligned with when we started seeing the Nike Swoosh I don't know that anybody really expected that I know we expected the tax loss harvesting in December and then rebuying Jan but the fact that we pretty much Nike swooshed starting jn1 pretty wild so of course you're going to have outsized gains year to date for 2020 uh uh three but most people didn't buy all their junk you know in the first trading day of January anywho so what do we have here uh option volumes high demand pick it up again great Rising optimism on stocks amongst retail okay uh cash bonds remain King yep talked about that already all right so we're going to go over to Morgan Stanley uh we'd like to take a look at Morgan Stanley so Morgan Stanley oh Morgan what have you to say so Morgan Stanley this was a little wild you ready for this new work on the labor market now supports a soft Landing you know I'm trying to find bearish pieces but even the Bears are starting to sound bullish kind of interesting so what do you got over here you got we see wage growth slowing into 2024 but identify five key factors that should keep the unemployment rate low underpinning or call for a soft Landing all right let's get into the five factors in detail so hard Landings are recession our call for a soft Landing is underpinned by a market a labor market that slows but remains resilient as companies in certain sectors continue to backfill position positions as well as retain existing workers now this is interesting so consider this idea of of a back filling and what Morgan Stanley is going to do is they're going to evaluate as well as what other institutions have been doing is they're evaluating this idea that a lot of people have at their jobs potentially been overworked since the pandemic just because it's been so hard to get your hands on uh this this actual um proper amount of Labor and so what they've done companies done in general is if they just overwork their existing uh workers and backfilling is a way of saying okay let's take some of that stress off and start pulling back a little bit to where we're saying all right let's let's distribute this evenly and that really that type of back feeling supports continued hiring so that way you're not putting as much stress on your existing workers anymore there's actually another piece by unicredit uh uni credit right here is a piece we broke this down this was just from a couple days ago here but take a look at this segment right here there are many factors that could explain the slow response of the labor market to the fed's tightening cycle well we know we've gone up 500 basis points so why is the labor market doing so well First the full effect of a monetary policy change on output is usually transmitted with a lag we know that unemployment tends to be lagging so in other words that we're still gaining significantly into what we've gone to a pretty tighter restrictive macro environment led by the FED second unusually high savings stock built up during the pandemic has allowed household to keep spending now we've heard this before people have more money with the exception of those in the lower maybe 40 percent of incomes they've already spent their money but those higher levels are continuing to spend and that's supporting earnings growth at companies or even if it's not earnings growth at least it's supporting earnings flatness but that earnings flatness is allowing companies to retain their talent third still high profitability of firms right well that combines with spending right you need revenue and the profitability is is margin you're not having to squeeze margin so low yet that you're saying look just to survive we need to start laying people off you haven't gotten to that point yet I really think some of the layoffs that we've seen at Big Tech have been what I call opportunistic layoffs opportunistic layoffs are kind of where you're like dude we've gotten bloated we've hired too many people half of these people don't even show up for work they they they're not productive they don't care they're just collecting a paycheck if we fire them we're going to get sued but if we lay them off because of an economic recession then they won't sue us I I honestly think a lot of that goes on anyway uh and then uh finally the service sector which is driving the phase of the recovery uh is is a a sector that favors a shift from spending Goods you know obviously to Services whatever whatever uh is is uh is still expanding and so you've got these these five elements that are why you're seeing this labor hoarding and I thought this piece was perfect to combine with the Morgan Stanley piece right here uh wait for that right here to load there we go because that's what they're talking about this labor hoarding and now Morgan Stanley phrases this slightly differently they suggest that the economy is still understaffed uh and this is what that backfilling means where you're saying look we're still overworking people and we get another person in now we can get into a little bit more of Labor balance at our companies uh and really a lot of companies don't want to lay off the good workers just for the sake of a little bit of a margin boost because when the economy starts booming again it's gonna be hard to find those people again so it'd be better to get through the tough time with less revenue or maybe flat uh net income or whatever but at least get through with great people who are going to do fantastic work going into the next cycle so uh that was fascinating from Morgan Stanley as well as uni credit uh so that's a little bit on hiring but uh what else do we have here when it comes to productivity Morgan Stanley made this interesting argument about a GDP looking at GDP data per worker and that's how they were identifying that people are still being overworked and that maybe by hiring more you're actually just bringing this into a balance and that's why you're potentially continuing to see this hiring what else we also note this here past Cycles indicate that state and local jobs tend to recover more slowly than private sector employment mainly due to revenue shortfalls causing budget pressures and the inability to keep up with private wages so really uh it's a way of saying that when the economy starts booming the private sector gets all the jobs because the government doesn't have as much money to pay competitive prices uh and in a few recessions local government workers actually end up losing uh jobs because even local governments get squeezed but that's more like your 1981 and 2008 recessions knock on wood you don't see that today that would be bad when you start seeing that that public sector laying off people uh however as the private sector slows down and they finish their back filling now the government can actually step in and start hiring people because there's less competition for people so this is kind of wild I hadn't heard this argument before but take a moment here and think about that for a moment one second I'm so sorry this this cough is just absolutely killing me uh but every time I take like a brief little pause just think that when I'm coughing I'm going coupon code expires tomorrow all right so I hadn't thought about this before but I think it's it's such an interesting perspective that okay so private sector hiring goes down and then you kind of go low and then it's almost like you hit like a clown Bell thing oh now governments can hire government hiring goes up and so the overall level of hiring actually stays elevated that's actually kind of incredible was fascinating all right let's keep going here uh so let's see okay that's the labor hoarding segment what else do we have here uh Morgan Stanley suggests that they do not see unemployment getting close to six percent they don't see it uh they think that unemployment may increase slightly but nothing close to the levels of six percent a prediction of six percent assumes the post-covered relationship between post uh postings and unemployment scene from 2020 to April 2022 remains valid we argue that the shape or position of the curve curves that they refer to may change over time and point to the fact that recent data prints seem to be moving along a different path now they use these these fancy uh charts here like the um Beaver Ridge curve which on one side plots the vacancy rate on on the other side plots the unemployment rate and the idea is that usually the lower the vacancy rate the higher the unemployment percentage but as is usually a problem with uh history is that every cycle has elements that are different and so now they're charting a soft Landing they're like wait a minute we have a higher vacancy and a lower unemployment rate this is interesting so you know things slightly different than you would have otherwise expected uh in addition to that they expect higher labor force participation will come out and I will continue to see labor force participation actually grow over the next few months now there were some uh banks that uh I don't have a full piece on from them but there were some banks talking about how they expect Unemployment uh claims and the jobs creation level to finally actually start showing negative negative reads uh starting in about September October which is actually coming up we're already basically in July which is crazy that means we're already done with half of the year uh that's that's pretty remarkable but uh anywho so uh here is also an exercise where they come to this conclusion say in a more recent example a positive 100 basis point shock to wages only raises inflation by 10 basis points now this was another shocker to me because history tells us that a wage price spiral occurs when wages rise price is rise but this cycle I don't like to use the phrase this time is different but this cycle has so far been different in that this isn't so far really been a wage driven inflation it was a money Printing and supply chain driven inflation disaster and so now you've got Morgan Stanley estimating that even if we see wages Rise by one percent we actually expect inflation to only go up one tenth of that that's insane 10 basis points so in other words to get a full percent of inflation you would have to see wages go up 10 percent that's insane they call this the fall in the inflationary pass-through representing a substantial reduction in the dynamic effect of wages which is something that history would be like no but the recent data is showing exactly that look at this wages explain only minimal fraction of price movement in in recent years you can see that here in the uh the orange this is how much wages are really contributing to inflation relative to the blue which is how much wages used to contribute to inflation between the 70s and 1999 that's remarkable so how do we piece this together well you have Barclays talking about bears becoming Bulls because they're following yet positioning still mostly cash and bonds are you kidding and then Morgan Stanley's like yo this employment situation ain't that bad and uni credit both of them are like dude even if private sector hiring goes down the government step in it'll be their turn so you got buffers unemployment rate probably won't go as much up as much as people fear and uh wages aren't actually driving inflation this is remarkable like I I really I want bad news uh because I I want to challenge my opinions you know I met with um who remembers where I did the interview with Gordon Johnson this sucks man anyway I did the interview with uh Gordon Johnson and uh you know he's a Tesla bear and one of the reasons I wanted to do that and you should look it up just type into YouTube meet Kevin Gordon Johnson it's really good but one of the reasons I like putting myself in front of the Bears is because I I truly want to hear their argument and I'm like give me the best you got you know like make a good presentation convince me to sell is what I say and I just haven't been convinced yeah so so that's not saying I'm gonna be right but um you know I mean obviously inflation could somehow magically Skyrocket again I guess in America it should happen in England which you know in the United Kingdom is but uh they're not short of that it just doesn't seem that horribl