I don’t know about you, but this guy is super-excited about stocks:
So who’s your best friend investors?
Well, “I will tell you, who the better friend is, and some day, that will be proven out – and ‘bigly’.”
No, but seriously, the Nasdaq hit a new all-time high on Friday and equities managed to come out of August largely unscathed after risk assets passed a trial by fire (and fury) with flying colors.
Notably, the latest CFTC data shows that traders piled into equities, adding 58k E-mini contracts in the week through Tuesday, taking their aggregate position to 200k – the 99th percentile of the last 2 years:
As noted on Friday evening, this comes as the S&P hasn’t had a 3% selloff in 10 months, a streak the likes of which we’ve only seen two other times since World War II:
Meanwhile, Deutsche Bank notes that the post-election rally has been fueled by positioning, defined as aggregate short interest including that in cash equities, ETFs, and asset managers and leveraged funds’ positioning in S&P 500 futures.
As you can see, aggregate shorts have now moved to the bottom of the post-crisis band.
“Aggregate shorts as a proportion of the S&P 500 market cap have been fluctuating within an elevated band of 1.8% to 2.8% since the start of the Great Recession in 2007, compared to an average of 1% earlier,” Deutsche wrote, in a note out yesterday. “Since the election, aggregate short interest has moved from slightly above the band to the bottom, driven initially by a large reduction in shorts in cash equities and ETFs but since by rising long positions in S&P 500 futures.”
What could go wrong? After all, it’s not like the geopolitical backdrop is littered with figurative and literal land mines or anything…