DC Lite #330

In partnership with

1. Corporate profits. "Do firms have the ability to take some on some of the tariff squeeze? Before-tax corporate profits as a percent of GDP jumped to 13.5% in Q4, a record high. For the manufacturing sector, profits to GDP are running about where they did in 2015 (~2.5%)."

2. Corporate profits vs. fiscal tightening. "As the government has been dissaving, ie spending, with gusto, it has driven profits higher. As it tightens its belt, it’s highly likely profits will drop. Needless to say, that’s not good for stocks, especially with valuations close to an all-time peak."

3. Bitcoin futures positioning. "The 'non-commercial' category of Bitcoin futures traders in the COT Report data have moved to a sizable net long position. That is a bottoming sign for Bitcoin prices."

4. Retail investor sentiment. There have only been 2 other instances where the % of AAII bears stayed above 50% for at least 5 consecutive weeks: 1990 and 2022.

5. Equity ETF flows. "US-focused ETF inflows have obliterated any other Q1 with +$137b, which is 85% of all flows. Ex-US ETF haul as actually been below avg. While headlines, HFs talk 'exiting' the US, ETF investors are on a buying spree for better or worse."

ICYMI

• Wed 3/26 #329: "Traders are piling into 5Y Treasuries as tariff risks cloud the Fed’s rate path"

• Tue 3/25 #328: "High-yield credit spreads are now back below their 2024 average"

• Mon 3/24 #327: "Futures Traders have accumulated a rare Long VIX position"

• Fri 3/21 #326: Goldman has CTAs modeled as buyers of US equities in all scenarios over the next week and month