Amidst the bullish sentiment, it’s crucial to dissect the data behind the scenes. The current level of money market funds, historically low in comparison to the total market size of US stocks, suggests a significant influx into equities. This, coupled with severe intraday volatility and the Federal Reserve’s rate cuts, paints a complex picture of market dynamics and potential challenges ahead.
What’s going on:
- Money market funds are currently at historically low levels compared to the total market size of US stocks.
- Intraday volatility last week was notably severe, contrasting with close-to-close movements.
- The Federal Reserve’s rate cuts significantly contributed to the rally in equities.
Potential Implication:
- Historically low levels of money market funds suggest a significant inflow of funds into equities, potentially driving market volatility.
- The Federal Reserve’s monetary policy decisions, particularly rate cuts, have a substantial impact on market liquidity and investor sentiment.
- The correlation between money market funds, Federal Reserve actions, and market performance underscores the importance of monetary policy in shaping market dynamics.
Sources:
"There is a lot of money on the sidelines"
It’s funny how nobody who sees this as bullish bothers to look at this data in relation to the total market size of US stocks.
When examined in this context, the current level of money market funds is historically low, significantly… pic.twitter.com/G75yoxPljM— Otavio (Tavi) Costa (@TaviCosta) April 20, 2024
Same idea if we analyze money market funds relative to money supply: pic.twitter.com/mmgnislKEC
— Otavio (Tavi) Costa (@TaviCosta) April 20, 2024
Intraday volatility last week was much more severe than close-to-close moves.
via GS Briggs pic.twitter.com/0thsNXgtTv
— Daily Chartbook (@dailychartbook) April 22, 2024
So equities rallied 27% from the lows in October before the recent correction.
You can time the bounce perfectly from when the market started predicting rate cuts. The cuts got larger and larger by the month which just fueled the rally.
As soon as the Fed pivoted stocks 💀 pic.twitter.com/GM3itYgdrV
— QE Infinity (@StealthQE4) April 22, 2024
This week was the Bitcoin halving.
And it was also the AI halving.
And it was the 4/20 dope smoking celebration. pic.twitter.com/VXVR4G0wdN
— Mac10 (@SuburbanDrone) April 21, 2024
The S&P 500 was down for the 3rd consecutive week.
Key events:
1) First reading of US Q1 2024 GDP data on Thursday.2) March PCE Inflation data due Friday.
3)~40% of the S&P 500 scheduled to report their earnings incl. Microsoft, Tesla, Meta, and Googlet.co/oTVW068j28
— Global Markets Investor (@GlobalMktObserv) April 22, 2024
Not only do we have massive unwinds of concentration risk going on and the absolutely gigantic failure of the throwover attempt but @barronsonline absolutely nails the top for $NDX plus the $NVDA @nvidia Ponzi
The @barron’s gift this weekend was NOT one I was expecting but… pic.twitter.com/H1OJtGBYKQ
— @mcm_ct_usa (@mcm_ct_usa) April 21, 2024