Market Trends Indicate Ambiguous Macro Trends, Strong Earnings Cycle, and Rising Sentiment

The Global Wave macro indicator, a widely followed market gauge, has been exhibiting a sideways move, suggesting ambiguous macro trends. However, other global investment regime indicators are providing a more positive signal. Key takeaways from BofA Securities' latest report, Sentiment Surge, include a robust global earnings cycle with no signs of an earnings downturn and a rising Global News Pulse on strengthening sentiment in stock-specific news.

Key Takeaways:

• Global earnings cycle remains robust with no sign of an earnings downturn.
• Global News Pulse continues to rise on strengthening sentiment in stock-specific news, reaching a four-year high.
• Long-only positioning: buying Asia, selling the US, with $94-billion invested in Asian shares and $164-billion sold in US shares.
• Crowded Positives: Broadcom, Mastercard, Samsung Electronics, Wells Fargo, and UniCredit; Crowded Negatives: Costco, Meituan, Adobe, Nestle, and Accenture.
• Triple Momentum (earnings, price, news) is strongest for Diversified Financials, Banks, and Insurance, and weakest for Real Estate, Consumer Staples, and Software.
• Among large and liquid stocks globally, the Triple Momentum Rank is highest for Barrick Mining, Robinhood Markets, Banco BTG Pactual, Fresnillo, Wiwynn, SK Hynix, Soc Gen, KBC, ABN AMRO Bank, and Aselsan.

Statistics:

• $94-billion invested in Asian shares by long-only funds globally.
• $164-billion sold in US shares by long-only funds globally.
• 0.3% increase in real spending in the past six months.
• 0.7% decline in nominal spending forecasted for September.
• $3.5-billion worth of Palantir Tech shares bought by long-only funds in July.
• $1.3-billion worth of Samsung Electronics shares bought by long-only funds in July.

Sources:

• BofA Securities' report, Sentiment Surge.
• BMO senior economist Shelly Kaushik's analysis.
• Goldman Sachs' Peter Oppennheimer's report.