{"id":1479468,"date":"2024-07-25T17:45:00","date_gmt":"2024-07-25T21:45:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1479468"},"modified":"2024-07-25T17:45:00","modified_gmt":"2024-07-25T21:45:00","slug":"little-cash-on-the-sidelines-may-indicate-firepower-to-sustain-equity-rally-diminishes","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/little-cash-on-the-sidelines-may-indicate-firepower-to-sustain-equity-rally-diminishes\/1479468\/","title":{"rendered":"“Little Cash On The Sidelines” May Indicate Firepower To Sustain Equity Rally Diminishes"},"content":{"rendered":"

“Little Cash On The Sidelines” May Indicate Firepower To Sustain Equity Rally Diminishes<\/span><\/p>\n

\n

While Goldman Sachs flow of funds expert Scott Rubner issued a ‘correction watch<\/a>‘ on\u00a0major US equity indexes ahead of the\u00a0Superbowl of earnings for Mag7 stocks,\u00a0analysts at BCA Research have informed clients that US stocks “will soon peak, and a bear market will commence.”\u00a0<\/strong><\/p>\n

Arthur Budaghyan leads the team at BCA Research, which published the note “Little Cash On The Sidelines”<\/em><\/strong> for clients on Wednesday. The rationale behind peaking stocks is record low levels of “cash on the sidelines”<\/strong> for US retail investors and investment firms, which only suggest “there is little firepower.”<\/strong><\/p>\n

Budaghyan begins the note by explaining “cash on the sidelines,” as the percentage of the US equity market cap has slid to a record low,<\/strong> suggesting limited flows into securities markets, such as equities and government bonds.\u00a0<\/p>\n

Source: BCA Research<\/em><\/a><\/p>\n

Given this view, Budaghyan stated,\u00a0“The odds are that US stocks will soon peak, and a bear market will commence. Global asset allocators should overweight government bonds versus stocks. A sizable allocation to US dollar cash is also warranted.”\u00a0<\/strong><\/p>\n

To clarify what happened to the sideline cash,\u00a0Budaghyan said, “The\u00a0aggregate amount of investable funds is still large in absolute terms, though it has stagnated as the Fed reduced its asset holdings<\/strong>.”\u00a0<\/p>\n

Additionally, investable funds have declined as the Fed’s quantitative tightening has reduced the money supply.\u00a0<\/p>\n

Source: BCA Research<\/em><\/a><\/p>\n

For the technicians…<\/p>\n

Source: BCA Research<\/em><\/a><\/p>\n

The conclusion here is that\u00a0the low ratio of investable funds and\u00a0the overvalued US equity market could be a tipping point in the equity market rally powered by AI themes.\u00a0\u00a0<\/p>\n

Source: BCA Research<\/em><\/a><\/p>\n

History of bubbles.<\/p>\n

Source: BCA Research<\/em><\/a><\/p>\n

Meanwhile, keeping the lofty valuations alive has been record stock buybacks from megacorps like\u00a0Apple, Microsoft, Alphabet, and Nvidia, dominate buybacks. For example, Apple’s buyback program<\/a> will account for 10% of 2024 buybacks.\u00a0<\/p>\n

<\/a><\/p>\n

As noted earlier,\u00a0Goldman’s\u00a0Rubner maintains a ‘correction watch’ for stocks.\u00a0<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nThu, 07\/25\/2024 – 13:45<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/little-cash-sidelines-suggests-firepower-sustain-equity-rally-diminishes<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

“Little Cash On The Sidelines” May Indicate Firepower To Sustain Equity Rally Diminishes While Goldman Sachs flow of funds expert Scott Rubner issued a ‘correction…<\/p>\n","protected":false},"author":0,"featured_media":1479469,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-1479468","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbimBl-6cSo","jetpack_featured_media_url":"https:\/\/bugaluu.com\/news\/wp-content\/uploads\/sites\/3\/2024\/07\/2024-07-25_12-02-06-1x5dGz.png","_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1479468","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1479468"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1479468\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1479469"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1479468"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1479468"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1479468"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}