ZeroHedge Edit: New Investment Ideas are Out
**Bonus: GS Equity 2024 Report
"Yesterday’s exaggerated moves were almost entirely based on one thing.
Fresh 2024 recommendations being acted upon."
Why We Rallied So Much, Really
Bonus: GS Equity 2024 Report at bottom
Many will be commenting yesterday’s move was unwarranted given the barely favorable CPI data point. They are all correct empirically. Yesterday’s move was a massive exaggeration given the data point announced, even with the loosened financial conditions. But this was a seasonal event, with special emphasis on *event*.
Yesterday’s 23bps easing of US financial conditions was historic…
Via ZeroHedge
CPI and Government Risk Were Cleared From the Runway
Data like CPI released determines the direction of moves (Up, down, sideways) but not magnitude. The flow volumes determine magnitude of those moves. And there are a lot of those right now waiting to be deployed.
Therefore, yesterday’s moves were entirely based on one thing. Fresh Bank recommendations being acted upon. What we euphemistically call Buy Season recommendations. Last year’s announcement post and explanation can be found here.
To clarify a little bit: EOY recommendations were at the ready to be released in the markets but were on hold until yesterday for two reasons
The First was the CPI report. That was key for relying on the continued rate-hike pause Powell has been on. The released low print signaled little chance of Fed-instigated surprises for the rest of the year.
The Second, and at least equally important was government shutdown risk being punted down the road until January. This gives RIAs clear sailing for a month. It allows them to implement strategies and ideas with known unknowns having been resolved.
And that is what happened yesterday. Bullion, Breadth, and Bonds all over-performed in spades. Which brings us to Micheal Hartnett who coined that phrase.
Last week’s Hartnett post: Founders: Bullion Benefits "Post Policy Panic In Early 2024"- Hartnett gave yesterday's exact scenario. When you are the best macro analyst (for years now) with a flair for big picture trends (like Zoltan) and an uncanny ability (really, this part is amazing) to call market inflection points, The street listens and sometimes copies you. Most analysts on the street are emulating his asset mix for different reasons. Here are the common themes
Bet on a policy panic in 2024
Sell Mag 7- Buy cyclicals ( Breadth)
Buy Bonds somewhat
Buy Bullion if Bonds recover
For Goldman's take on why yesterday's rally read the ZeroHedge premium post entitled "What Just Happened" - Goldman's Melt-Up Post-Mortem... And What's Next? We read it, and it only confirmed things:
GS Research is out with their 2024 US equity outlook this morning. [They] forecast the S&P 500 index will end 2024 at 4700, representing a 12-month price gain of 5% and a total return of 6% including dividends. Given the breadth thrust we’ve now seen in the index moves, the desk view is that the market can pull forward a lot of the December seasonality and ‘pre-trade’ some of this 2024 optimism near-term.
What does it mean? It means all that money waiting for loose ends to be taken care of got what it needed. Now we see how much money it actually is. Santa Claus may be coming to town