Welcome back readers. Phil Rosen here reporting from Manhattan.
Optimists rejoice — Wall Street strategists just pinpointed a handful of trends, indicators, and gauges that all suggest 2023 could see a new running of the bulls.
No time for tomfoolery today. The market waits for no one.
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Reuters / Brendan McDermid
1. Between macro trends and investor positioning, Bank of America strategists think there's reason to bet on equities as the second quarter gets underway.
The S&P 500 has already seen a sturdy 8% gain to start 2023, but year-end gains could be even bigger if one of BofA's bullish surprises pan out.
Any one of these, strategists wrote in a note to clients, could jolt the pessimism out of markets.
Right now there's a large swath of investors that aren't expecting a great year for stocks — including hedge funds, which have piled up their largest short position against the S&P 500 since 2011.
That, plus traders have flocked to money market funds with hefty cash positions. Those have now topped a record $5 trillion.
To Bank of America, any of these scenarios could mean upside for stocks:
- An end to the Russia-Ukraine war
- An increase of immigration in the US and ChatGPT's deflationary impact on the workforce
- An arms race in Big Tech spending
- No recession
- Investors once again viewing stocks as a better alternative to bonds
But if you ask Fundstrat's Tom Lee, one of Wall Street's famed perma-bulls, the market actually already told us a new bull market has started.
Lee said bearish investors are now "trapped" because the possibility of a downturn has already come and gone — and a key technical indicator just flashed.
"The S&P 500 has now spent more than 25 weeks above its 200-week moving average," Lee said. "Since 1950, there are zero instances of the S&P 500 making a new low once it has recovered above the 200-week moving average and spent at least 15 weeks there."
The part that makes Lee so certain?
He says this under-the-radar technical signal has a 100% win ratio.
How are you positioning your portfolio for the rest of the year? Tweet me (@philrosenn) or email me (prosen@insider.com) to let me know.
Mikhail Svetlov/Getty Images
2. US stock futures rise early Monday, as investors brace for a crucial week of earnings reports to weigh recession risks. Here are the latest market moves.
3. On the docket: Charles Schwab, State Street, and more, all reporting.
4. Goldman Sachs and UBS analysts don't anticipate that softer inflation will be enough to sustain a stock rally. But that doesn't mean there aren't still opportunities in the market. They named these seven investments as a good place to earn a profit in any landscape.
5. Retail investors are sitting on big losses in their stock portfolios even as the market climbs. Data from VandaTrack shows that the average retail investor is down 27% on the year. Looking ahead, growing recession fears could make everyday traders more hesitant to participate in stocks.
6. China and India are buying so much Russian oil that Moscow's now selling more crude than it was before invading Ukraine. Kpler's Matt Smith told me that India has gone from a sporadic buyer of supplies to now relying on the warring nation for about half its total oil imports — and it's all happening while the West keeps sanctioning Russia.
7. JPMorgan's CEO Jamie Dimon is anticipating a storm ahead for the US economy. Banking sector woes, a hawkish Fed, and geopolitical tensions all contribute to an uncertain macro outlook, Dimon said. In any case, his company's doing just fine: JPMorgan posted record revenue for the first quarter of the year.
8. Market legend Rob Arnott said there's now an 80% chance of a recession amid a credit crunch. He broke down his top recommendations on where to park your money as turmoil unfolds — including one trade he believes will deliver 15% yearly returns for the next decade.
9. The investment chief of $1.1 trillion Nueveen shared how to allocate assets across stocks, fixed income, and credit as a downturn sets in. She explained what to buy and where in the market to look as falling earnings take their toll on equities.
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10. One of Charles Schwab's top investors dumped its entire $1.4 billion stake during the bank turmoil. Here's what GQG Partners said late last week: "We didn't see an existential risk but they were caught up in the sentiment around banks."
Curated by Phil Rosen in New York. Feedback or tips? Tweet @philrosenn or email prosen@insider.com.
Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.