YWR: Killer Charts

Disclosure: Personal views and market commentary only. This is definitely not investment guidance or advice. For that definitely seek professional help.

We’ll start with sentiment and positioning and then a few economic indicators. At the end I’ll give my 2cts on what I think is going on.

Grumpy Fund Managers more Bullish

BofA’s August Fund Manager Survey shows fund managers getting a little more positive. Not bullish, but off the lows. Note retail investors are consistently more highly allocated to equities than grumpy fund managers.

Some of their cash has been deployed into stocks.

Most crowded trades are long tech and short China.

Fund managers find the higher yields attractive. My guess is this is short duration bonds. Extreme negative positioning in REIT’s.

CTA’s

But grumpy fund managers with no inflows aren’t always a good indicator of investor positioning. The real traders are the CTA’s and they are long the trend.

2008 style clamp down on new lending.

Meanwhile bank loan officers have shut the barn door on commercial real estate and construction loans (after the horse has already left). We saw last week multi-family construction is currently at record highs.

Banks don’t want to lend and customers don’t want to borrow either.

The Chinese Savings Explosion

There is so much negativity about China. It seems like the place is imploding, but to some extent it’s a voluntary implosion. Sentiment is awful and the Chinese don’t want to spend, but they’re still making money. As a result their savings are going through the roof.