Inflationism Has Overturned Society

This article is archived.

Upgrade to premium to access all of the ZeroHedge archive.

Already a member? Sign in.

Introducing ZeroHedge Premium. Why Premium?

BASIC

Snowflake

FREE

REGISTER TO UNLOCK THESE FEATURES

- Commentary and Analysis
- Daily Recap Newsletter
- Community Comments
- Free 2-Week Trial To SpotGamma

SELECT

PREMIUM

Jack's Lack Of Censorship

ONLY $25/MONTH

BILLED ANNUALLY OR $30 MONTHLY

All BASIC features, plus:

- Ad-free environment
- Unmoderated comment section
- Premium commentary features including user tiering and comment tracking (coming soon)
- Access to private, invitation-only Zerohedge twitter account
- Exclusive access to The Market Ear content
- Access to Newsquawk breaking news and market squawks, and discount for real-time commentary
- Early glimpse at all our posts

SELECT

PROFESSIONAL

Project Mayhem

ONLY $85/MONTH

BILLED ANNUALLY OR $100 MONTHLY

All PREMIUM features, plus:

- Access to our constantly updated research database via a private dropbox account (including hedge fund letters, research reports and analyses from all the top Wall Street banks)
- Notifications for new posts, breaking news and comment replies (coming soon)
- Discord-based chat and commentary rooms (coming soon)

SELECT

INSIDER

Paper Street

COMING SOON

STAY UP TO DATE

All PROFESSIONAL features, plus:

- Direct access to Zerohedge staff
- SponsoredPostFull archives

Want more of the news you won't get anywhere else?

Sign up now and get a curated daily recap of the most popular and important stories delivered right to your inbox.

Sell low, buy high agony continues

Sell low, buy high

What a difference a week makes. Last weekend (here) we wrote: "According to GS PB, the macro shorting activity was the largest in almost a year." The latest from GS is basically the inverse to last week: "In notional terms, this week’s short covering in US Macro Products is the largest since Nov ’20 and ranks in the 100th percentile vs. the past five years". Are these people trading short gamma, without the theta checks?

Source: Refinitiv

Buy buy buy

With US equities rallying this week, funds continued to position themselves directionally longer, as evidenced by net leverage across US Equity L/S funds rising by +5% to 50% this week (the first time nets have broken 50% since February 2022 and the largest WoW move YTD). Though it is important to note, a general sense of trepidation still lingers among the fund community… most of the long positioning coming in the form of short covers. (MS PB)

Chasing the rally...

...is basically chasing tech. We just saw the largest inflow in 4 weeks.

Source: BofA

Tech facts to digest

It is hard to find bigger superlatives, but here are a few via BofA's great quant team. The top 7 stocks:

1 … drove 73% of S&P 500 gains in 1H, each up 90% on average in 1H

2 … have a market capitalization of roughly equivalent to half of US GDP

3 … trade at a Price to Trailing Earnings (P/E Trail) ratio of ~40x. The S&P 500 Ex-7 trades closer to 15x

4. … is expected to represent all US corporate earnings growth and then some in 2Q – a 21% YoY gain vs. a 10% YoY loss for the rest of the S&P 500

5 ... TMT represents 8% of US GDP, 17% of S&P EPS and 40% of S&P market cap

Source: BofA

Tech dispersion

The high estimate dispersion for Tech, partially due to AI's unpredictable outcomes, indicates the difficulty for these companies to justify their valuations. Big Tech saw a similar EPS estimate divergence from the rest of the S&P 500 post-COVID, but they met expectations. It remains to be seen if they can repeat this success as US equities aim to fully recover from the recent bear market. Watching this closely.

Source: Barclays

But fewer funds can buy the top tech stocks

Interesting chart via Barclays showing the "critical mass in ownership". There are basically fewer funds left to chase these stocks.

Source: BofA

Two more weeks...

...and the buyback blackout period will end. Time to turn on the VWAP machines in early August.

Source: GS

Central bank balance sheet expansion rolls over

Back at levels from end of 2022.

Source: SEB X-Asset

Volatility into earnings

The volatility crush is pricing very small moves for the earnings season. Note that the gap between VVIX and VIX is very wide here (still big demand for VIX options). The 1 week atm SPX straddle is priced just above 1%...

Source: Refinitiv

See TME's daily newsletter email above. For the 24/7 market intelligence feed and thematic trading emails, sign up for ZH premium here.

2 hours ago at 22:26

Upgrade to Premium

Today's Top Stories

Pronoun Lockdown: Almost Half Of Millennials Want Jail Time For "Misgendering"

Contact Information+

Assistance and Requests: Click here

Tips: tips@zerohedge.com

General: info@zerohedge.com

Legal: legal@zerohedge.com

Advertising: Click here

Abuse/Complaints: abuse@zerohedge.com

Login

This article is archived.

Upgrade to premium to access all of the ZeroHedge archive.

Introducing ZeroHedge Premium. Why Premium?

All BASIC features, plus:

All PREMIUM features, plus:

All PROFESSIONAL features, plus:

More markets stories on Zerohedge

'Reduce Population': Kamala Harris Verbal Slip-Up Corrected By White House

Morgan Stanley: If Rate Cuts Come Early, What About The Fed's Balance Sheet?

Hedge Fund CIO: "Such Drama Should Remind Us To Do Those Things We Find Least Comfortable"

Want more of the news you won't get anywhere else?

Sign up now and get a curated daily recap of the most popular and important stories delivered right to your inbox.

Sell low, buy high agony continues

Sell low, buy high

Source: Refinitiv

Buy buy buy

Chasing the rally...

Source: BofA

Tech facts to digest

Source: BofA

Tech dispersion

Source: Barclays

But fewer funds can buy the top tech stocks

Source: BofA

Two more weeks...

Source: GS

Central bank balance sheet expansion rolls over

Source: SEB X-Asset

Source: SEB X-Asset

Volatility into earnings

Source: Refinitiv

Today's Top Stories

Pronoun Lockdown: Almost Half Of Millennials Want Jail Time For "Misgendering"