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BofA asked their Fund Managers (223 survey participants who manage a total of $643BN):
"What level of US 10y Treasury yields would cause you to rotate from equities into bonds?"
The "magic number" rose from 3.5% last month to 3.6% in the May survey
Disclaimer: I am not an investment advisor. This is just my opinion NOT investment advice.
ES volume is light. Yesterday's drop was 2 to 400% of normal while today's climb was 60 to 120% of normal, normal being the 20 day average for that 15 minute bar.
Looking for an explanation on small cap out performance. Positive fundamentals are lower import costs, but that also means lower cost imported competition. Small caps are not prime borrowers so rate increases hit them hard. They also have a lot of debt because they are newish to stock financing.
Small caps as a proxy for the most shorted may be true from time to time but it is getting pretty worn out. All I have left are the same animal spirits that are causing FANGs to be bid up.
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Trades with cats wrote:Looking for an explanation on small cap out performance. Positive fundamentals are lower import costs, but that also means lower cost imported competition. Small caps are not prime borrowers so rate increases hit them hard. They also have a lot of debt because they are newish to stock financing.
Small caps as a proxy for the most shorted may be true from time to time but it is getting pretty worn out. All I have left are the same animal spirits that are causing FANGs to be bid up.
The rising U.S. Dollar hits large caps more than small caps since the conversion is generally unfavorable
when international profits are converted back to dollars.
Small caps do not have have this problem as much, since most sales are domestic.
Right now there is a subtle rotation from large caps into small caps.
You can see this rotation on a $RUT:$SPX relative chart.
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