Despite the S&P 500 reaching multiple all-time highs, institutional investors and hedge funds remain cautiously positioned. Goldman Sachs' data shows that while they are long single stocks, they are also more short macro products than ever, indicating a high degree of hedging and skepticism.
Retail investors are a consistent source of demand for the U.S. equity market. Historically, they only become net sellers during periods of significant job loss, a condition not currently present given strong employment data.
The market is successfully absorbing significant equity supply, such as Google's $85B share sale and a potential raise from Meta. This is viewed as a sign of a very healthy market with robust institutional demand for offerings.
Systematic funds like CTAs are currently holding full exposure to the S&P 500, driven by the market's upward momentum. While they will continue to buy as the market rises, they are also poised to sell quickly if the market experiences a sustained downturn.
Keep pulling the thread on John Flood.