I’ll let you in on a little secret: No one in this industry has anything creative, let alone original, to offer, which means the vast majority of professional macro-market color published and disseminated during a given week says more or less the exact same thing.
Day after day, it’s the same cast of sell-side characters and Bloomberg terminal bloggers riffing on this week’s topics du jour, with the only differentiator being whatever vestigial editorial voice survives compliance, or makes it past a senior editor. That sort of thing’s invariably dry — hopelessly mundane — hence the cottage industry in independent macro-market commentary, which runs the gamut from staid to nefarious to insane.
At one point last year, a reader irritable with my political views wrote to me and professed his “weariness with market commentary re-written with an arrogant, narcissistic twist.” It was a hilariously accurate description. Had I been in the mood to engage, I would’ve told him the bad news: All market commentary is just the same color “re-written,” recycled and ricocheted around the same echo chamber. The “arrogant, narcissistic twist” is my brand, although I’m not sure that’s exactly how I’d describe it. If it weren’t for the “twist” (however you’d characterize it), I’d just be one more guy editorializing around the same charts everyone else is making.
It’s telling that a lot of readers have, over the years, come to prefer it if I don’t waste their time with sell-side research at all, or if I do, only to lampoon in. As one reader put it earlier this week, commenting on an article about Barclays’ new year-end S&P target, “I prefer your editorials poking fun at the strategists’ year-end targets.” (You and me both.)
With all of that in mind, BofA’s Michael Hartnett weighed in Friday with his take on the household equity allocation discussion. That’d be the same discussion from “Are Record Stock Allocations A Canary?” in which I quoted Bloomberg’s Cameron Crise, who delivered his spin on it earlier this week after JPMorgan’s Nikolaos Panigirtzoglou weighed in and so on and so forth. (That’s the echo chamber.)
The figure above is — wait for it — the same chart from my article, and from Crise’s and from Panigirtzoglou’s and from God only knows how many other people were just happy to have something to riff on to meet this week’s quota.
Hartnett didn’t have a lot to add, but he noted that at 29%, stocks’ share of household financial assets has now “exceed[ed] the prior peaks in 1968 and 2000,” which doesn’t bode well for returns. The 10-year annualized S&P return following 1968 was 3.5%. It was -0.4% following 2000.
For what it’s worth — and now we’re in Friday afternoon potpourri territory, where I’m just tossing out notables — US equity-focused ETFs and mutual funds saw their largest outflow of 2025 this past week, according to EPFR’s update. Indeed, the $20 billion exodus counts as the only truly meaningful outflow from US shares so far in 2025.
The figure shows you the region-by-region breakdown. Suffice to say this past week was very pronounced from a “RoW > US” perspective. Every other region saw a net inflow, including a seventh straight for Europe-focused funds.
Hartnett was keen to note that the outflow from US stocks was “driven by domestic not foreign sellers.” (As a quick aside, I don’t love this time of year when it comes to analyzing flows. In addition to quarter-end, it’s tax season in the US.)
From a strategy perspective, Hartnett’s sticking with his “BIG” thesis which, I must say, is working out pretty well so far. “BIG,” you’re reminded, is an acronym for Bonds, International and Gold.
“The end of US big government, Magnificent 7-to-Lagnificent 7, the start of EU fiscal stimulus, the end of Japanese deflation and the return of the Chinese consumer are the five big inflection points” Hartnett said, adding that all of those are “weak USD catalysts and supportive of bonds, international equities and gold.”
Yo H, as a luxury goods aficionado, do you have a take on European luxury brands as a secondary play on “the Chinese consumer”?
If I recall correctly, he thinks LVMH has the best brand portfolio vs Hermes, but he didn’t say he was bullish just that Hermes isn’t looking good long term from a portfolio standpoint. China looks screwed from a demand situation so you might have the right idea but the wrong explanation
It’s LVMH vs Kering, not vs Hermes. Hermes is its own thing. LVMH has the portfolio. They have two of the Big 4 (Louis and Dior). Kering has Gucci, but in my opinion, it’s not even top 5 anymore. Kering has struggled to turn it around. They threw a Hail Mary pass in that regard a few weeks ago. Hold that though.
To the China question, Miu Miu has, I think, a lot of traction in that market. Miu Miu is a Prada company. Personally, I don’t love Prada and Miu Miu isn’t exactly for middle-aged men, so I’m not an authority, but if you’re really interested in that space and specifically who’s actually growing their appeal in the Chinese market, Miu Miu (i.e., Prada) is a good place to start looking. I’d look at Prada’s filings and see if they break out Miu Miu sales, and if they do, what the growth rate is in Hong Kong and China.
It’s also worth noting that Kering just promoted the creative director at Balenciaga to the main house, which means he’s going to be taking over the artistic process at Gucci. That’s a bold move. I mentioned this a few weeks ago, but Balenciaga is the only Kering brand with any real buzz. The problem is that Balenciaga’s buzz isn’t always good buzz, unless you think all publicity’s good publicity. It works, sort of, for Balenciaga, but trying to translate their aesthetic (if you can call it that) into success at Gucci is going to be difficult. All of that to say, that move at least makes Kering interesting again, if only in the sort of way that a Hail Mary pass is interesting in football.
But yeah, as the other commenter mentioned, LVMH is the undisputed publicly-traded champion in this category. The issue there is the same as it is for any other such company in any category — namely, is there any value left or is it fully priced?
Thanks for clarifying and for the added detail
H, I feel like I read all of your commentary, curious where the luxury goods discussion was
Thanks you’re the man. I will wait at least a month to ask you another question about luxury brands. LVMH not exactly cheap but not looking like it caught any sexy narratives yet either. Not sure if Chinese consumption will ever bring sexy back (sorry for the justin timberlake allusion) but the Xi-is-hellbent-on-reviving-demand-through-market-pumping narrative is already out there. I guess time will tell for any high end Chinese wealth effect fairy tales to catch a bid.
I’ll look into their regional sales and breakouts, thanks for the tip.
People are still paying their taxes?
Only if they are withheld from a paycheck.
Street macro analysts are reluctant or prohibited from pointing their fingers at the White House from fear of getting their firms blackisted.
Can you blame them? Afterall, we are talking about for-profit businesses.
Do any of you old geezers remember the scandals when internal communication among analysts at firms which were officially wildly bullish on each and every internet firm? Back then firms did not want to lose out on the happily profitable business of bringing garbage companies to market.
Analyst: “We can’t directly blame the President, but maybe we can just indicate the Jan ’25 downward inflection on this chart with something like “deleterious juxtapositional transition” or “DJT” for short.”
H-Man, liquidity is thin, this could be a big squeeze.