Two 59%+ winners, four above 25% in Aug – How this AI model keeps picking winners
On Monday, the JPM Delta One Desk reported a stabilization in equity exchange-traded funds (ETFs) with near-average inflows after a period of four weeks characterized by outflows or below-average inflows. The S&P 500 ETF (SPY), currently trading at $593.46 and near its 52-week high of $613.23, exemplifies this trend with a robust 13.66% return over the past year. InvestingPro analysis reveals additional insights about market momentum and valuation metrics. Commodity Trading Advisors (CTAs) are currently positioned long in global equities. Last week’s futures market activity showed significant buying in equity futures, particularly in Nasdaq, EAFE, Euro Stoxx 50, FTSE 100, NIFTY, Nickel, and Corn futures. Conversely, there were substantial sales in VIX, S&P TSX 60, Hang Seng, and several other futures including China 10-year bonds and Gold.
Asset Managers (AMs) increased their long positions in S&P 500 futures, while leveraged funds cut their short positions in the Nasdaq and U.S. Treasury 5-year and 10-year futures. Managed money displayed mixed activity, buying Brent futures but selling Corn and Wheat futures.
The ETF market saw $17.4 billion in inflows, indicating a return to average levels. The U.S. led the equity inflows, with the SPY maintaining its position as a market leader with a substantial $629.51 billion market cap and a steady 1.14% dividend yield. Brazil and Emerging Markets also experienced strong inflows. For detailed sector analysis and screening tools, investors can access the advanced stock screener. Thematic funds and funds focused on call/put writing were particularly popular among investors. Industrial and Health Care sectors attracted inflows, while Utilities and Financials faced outflows. Bond ETFs witnessed a shift from short-term government and Money Market/Ultrashort bonds to long-term government and Corporate Bonds, with high-yield corporate bonds receiving the bulk of the inflows.
Gold ETFs faced their largest outflows in four years, amounting to approximately $2.2 billion. Profit-taking was observed in fiat currency funds that had short positions against the U.S. dollar in relation to the Japanese yen, euro, and Swiss franc, whereas cryptocurrency ETFs saw inflows that were close to the average. According to InvestingPro, SPY maintains a "GREAT" overall financial health score of 3.31, suggesting strong market fundamentals despite the shifting landscape in alternative investments.
In other recent news, Deutsche Bank (ETR:DBKGn) has revised its year-end target for the S&P 500 Index, lowering it from 7,000 to 6,150. This adjustment comes as analysts, including Binky Chadha, reassess the impact of newly announced tariffs, leading to a reduction in the S&P 500 earnings per share estimate for 2025 from $282 to $240. Evercore ISI has highlighted the resilience of the U.S. economy despite a slight contraction in GDP by 0.3% in the first quarter of 2021, with S&P 500 companies reporting solid earnings at a $257 annual rate. Meanwhile, JPMorgan has noted a normalization of U.S. productivity growth, despite a 0.8% decline in nonfarm business productivity in the first quarter, attributing part of the weak GDP performance to this downturn.
Goldman Sachs has adjusted its economic outlook for 2025, raising its growth forecast for the fourth quarter to 1% and reducing the probability of a recession within the next twelve months to 35%. This revision follows a 90-day suspension of retaliatory tariffs between the U.S. and China, which has contributed to a moderation in tariffs. Market analyst Marko Kolanovic has expressed concerns over a potential market downturn, drawing parallels to past financial crises and suggesting a possible significant market rebalancing. He warned of high price-to-earnings multiples and the potential risks posed by inflated private assets and cryptocurrencies.
Deutsche Bank’s analysis suggests that the market is susceptible to fluctuations due to low equity positioning levels, with attempts at de-escalation in trade tensions yet to yield significant changes. The bank maintains that a credible easing of trade policies could lead to a significant market rally, contingent on a decrease in approval ratings. These recent developments highlight the complex and evolving economic landscape investors are navigating.
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