Nomura's Charlie McElligott is excited about the reinvigorated momentum factor rally which, as noted last week, he believes presages a "monster" September if seasonality is any guide.
The last several sessions have had a January-ish feel to them as U.S. stocks continue to melt-up on the back of a weaker dollar which has helped rescue an EM complex that was struggling mightily amid the greenback's ascent which is itself predicated on the notion that thanks to U.S. fiscal and trade policy, the Fed is pigeonholed into hawkishness, at least in the near-term.
On Thursday, McElligott is back with a short note that finds him characterizing U.S. stocks' recent "epic highs" as a "pretty-standard 'FOMO' after two months of ugly underperformance from active HF- and MF- complex."
That latter reference is to the breakdown in the "consensus" long Growth/short Value trade that accelerated post-Facebook's plunge and in step with the late July correction in the FANG+ index. That breakdown has now reversed amid the most recent bout of U.S. equity euphoria.
"'Value' simply will not work until the UST curve begins to steepen with a 'sticky' move being a 2019 story at best," McElligott writes.
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