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    US Fundamental L/S hedge fund leverage

    Gross leverage rose +1.4 pts to 213.3% (98th percentile, 3-year).

    Net leverage rose +0.4 pts to 52.2% (45th percentile, 3-year).

    US Fundamental L/S hedge fund leverage
    Source: GS PB
    CTAs sold a little

    CTAs exposure to equities off a little over the past 2 weeks.

    CTAs sold a little
    Source: Deutsche Bank
    BMI around 25

    Overall equity positioning is only modestly overweight (66th percentile).

    BMI around 25
    Source: Deutsche Bank
    Perfect score for weaker equities

    Morgan Stanley: what happens when one or more of these five things are happening?

    1) SPX forward earnings declining 

    2) yield curve inverted

    3) Unemployment below avg

    4) Mfg PMIs < 50

    5) 40% of banks tightening lending standards.

    “All five are in place today, which is rare.”

    Perfect score for weaker equities
    Source: Morgan Stanley
    Both back above 90

    Global hedge fund net and gross back above 90th percentile on a 1-year look-back.

    Both back above 90
    Source: JPM PI
    Adding risk

    HFs adding to gross in the US: 4wk gross flows at highest since mid-year.

    Adding risk
    Source: JPM PI
    Stock market positioning is bullish, but not extreme

    All caught up: Asset manager S&P futures position and S&P vs. 200D MA (chart 1).

    All caught up too: Equity CTA signal and MSCI world (chart 2).

    Stock market positioning is bullish, but not extreme
    Source: Macrobond
    Stock market positioning is bullish, but not extreme
    Source: Macrobond
    The gloominess of the young

    UMich Consumer Sentiment among ages 18-34 vs. overall Consumer Sentiment. When it's green, it means younger people are more optimistic than the the general public. In 30 years, we've never seen this sustained relative gloominess among the young.

    The gloominess of the young
    Source: Bloomberg
    Survey sentiment has fallen to extremes

    "Investor sentiment in surveys remains very low (7th percentile). This large a disconnect between rallying equities and poor investor sentiment was last seen several times in 2023, most notably around the misguided fears of a “liquidity drain” after the debt ceiling resolution (Skeptical Of The Liquidity Scare, Jun 2023). In previous instances of sentiment falling to these extremes, the median S&P 500 return over the next 3 months has been a solid 4% and over the next 6 months an even stronger 8%."

    Survey sentiment has fallen to extremes
    Source: Deutsche Bank
    The patient is breaking bad

    The anti-depressants start to feel like it is de-caff. Chart shows GS US Equity Sentiment Indicator of investor positioning.

    The patient is breaking bad
    Source: Goldman