Still in a buy the dip regime as still "gas in the tank". Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.

Tom Lee, CFA
Still in a buy the dip regime as still gas in the tank. Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.
Still in a buy the dip regime as still gas in the tank. Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.
Still in a buy the dip regime as still gas in the tank. Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.
Still in a buy the dip regime as still gas in the tank. Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.

VIDEO: We are still in a buy the dip regime.  The fact that money market cash again rose to an all-time high is bullish for stocks.

Please click below to view our Macro Minute (duration: 5:59).

Still in a buy the dip regime as still gas in the tank. Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.

Equity markets are up modestly for the week (despite Thu sell-off) extending the rally for a 20th week. While this rally is certainly mature (vs 16-19 weeks of most recent gains), there remains a substantial amount of dry powder to fuel further gains:

  • As extended as this rally might feel (20 weeks), a “buy the dip” regime remains as:
    – sentiment supportive –> still find many skeptics in our Latam roadshow
    – technicals positive –> Mark Newton sees S&P 500 5,250-5,300 by late March
    – flows very supportive –> record $6.1 trillion cash on sidelines
  • In our recent meetings, many investors express skepticism on cash on the sidelines, arguing that the $1.2 trillion rise is due to deposit flight from banks into money markets.
  • This is simply wrong. Here is the math:
    – since Feb 2023, total commercial bank deposits fell -$234 billion
    – this is presumably due to rate arbitrage of mm funds vs deposit cash
    – since Feb 2023, money market fund balances surged $1.2T to $6.1T
    – thus, only $234b of the $1.2 trillion rise is from bank deposit flight.
  • Where did the other $1.0 trillion come from? Well, it is certainly not bank deposit flight. In our view, this is mostly a combination of interest income (from bonds and cash), liquidation of stocks and savings flow:
    – In short, this is $6.0T of “dry powder”
    – thus, plenty of firepower to “buy the dip”
  • Anecdotally, we find investors are still largely skeptical of the rise in stocks in 2024. The skepticism stems from a combination of:
    – yield curve inversion means recession on horizon
    – inflation perceived as stubborn (Jan + Feb CPI) thus, fewer Fed cuts
    – valuations expensive due to 19X forward P/E
    – market seen as narrow due to FAANG
  • We have discussed the counterpoints to these numerous times. Foremost, there are statistical problems with seasonal adjustment. Thus, March CPI likely shows resumption of falling inflation. Similarly, P/E ex-FAANG is 16X, which is very reasonable considering the dovish Fed.
  • And as for a narrow market, both the S&P 500 equal weight index and Value Line index both made new all-time highs. Thus, confirming the S&P 500 move to new highs.
  • To me, history shows that one should be bullish as markets break to new all-time highs. There has never been an instance of markets topping at all-time highs. And for those investors who have remained skeptical of this 45% rally since October 2022, we wonder what could sway those “perma bears.”

BOTTOM LINE: We still recommend buying the dip as there remains “gas in the tank”

We have stated multiple times in the past that the full year plays out in January. And in 2024, S&P 500 gained >2%. This is a positive omen for the full year, meaning, we are still in a buy the dip regime:

  • Since 1950, there are 28 times (of 75 years) S&P 500 gained >15% in the prior year
  • And 13 of the 28 saw a positive January
  • 12 of the 13 saw full year gains, or a 92% win-ratio
  • Median full-year gain is +16%, versus +10% for all years since 1950

See why we have conviction that 2024 will be a good year? Moreover:

  • The 1 exception was 2018, which was the year Fed Chair Powell remained hawkish, instituting automatic +25bp hikes at every meeting
  • Using the +16% median gain implies S&P 500 YE of 5,400-5,500
  • Thus, our 5,200 target is too low but we have time to raise this target

As for investment strategies, the following are working in 2024:

Still in a buy the dip regime as still gas in the tank. Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.
Source: https://www.bloomberg.com/news/articles/2024-03-14/money-market-assets-rise-to-fresh-record-for-third-straight-week

Still in a buy the dip regime as still gas in the tank. Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.

Still in a buy the dip regime as still gas in the tank. Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.

Still in a buy the dip regime as still gas in the tank. Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.

Still in a buy the dip regime as still gas in the tank. Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.

Still in a buy the dip regime as still gas in the tank. Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.

Still in a buy the dip regime as still gas in the tank. Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.

Still in a buy the dip regime as still gas in the tank. Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.

Still in a buy the dip regime as still gas in the tank. Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.

Still in a buy the dip regime as still gas in the tank. Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.

_____________________________

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Key incoming data March:

  • 3/01 9:45 am ET: Feb F S&P Global Manufacturing PMI Tame
  • 3/01 10:00 am ET: Feb ISM Manufacturing Tame
  • 3/01 10:00 am ET: Feb F U. Mich. Sentiment and Inflation Expectation Tame
  • 3/05 9:45 am ET: Feb F S&P Global Services & Composite PMI Tame
  • 3/05 10:00 am ET: Feb ISM Services Tame
  • 3/06 10:00 am ET: Powell Testimony before US House Financial Services Committee Dovish
  • 3/06 10:00 am ET: Jan JOLTS Job Openings Tame
  • 3/06 2:00 pm ET: Fed Releases Beige Book Tame
  • 3/07 8:30 am ET: 4QF 2023 Nonfarm Productivity Tame
  • 3/07 9:00 am ET: Feb F Manheim Used Vehicle Index Tame
  • 3/07 10:00 am ET: Powell Testimony before US Senate Committee on Banking, Housing, and Urban Affairs Dovish
  • 3/08 8:30 am ET: Feb Jobs Report Mixed
  • 3/12 8:30 am ET: Feb CPI Slightly Hot (as anticipated)
  • 3/14 8:30 am ET: Feb PPI Mixed
  • 3/14 8:30 am ET: Feb Retail Sales Data Tame
  • 3/15 8:30 am ET: Mar Empire Manufacturing Survey
  • 3/15 10:00 am ET: Mar P U. Mich. Sentiment and Inflation Expectation
  • 3/18 8:30 am ET: Mar New York Fed Business Activity Survey
  • 3/18 10:00 am ET: Mar NAHB Housing Market Index
  • 3/19 9:00 am ET: Mar Mid-Month Manheim Used Vehicle Index
  • 3/20 2:00 pm ET: Mar FOMC Rate Decision
  • 3/21 8:30 am ET: Mar Philly Fed Business Outlook Survey
  • 3/21 9:45 am ET: Mar P S&P Global PMI
  • 3/25 10:30 am ET: Mar Dallas Fed Manufacturing Activity Survey
  • 3/26 9:00 am ET: Mar S&P CoreLogic CS home price
  • 3/26 10:00 am ET: Mar Conference Board Consumer Confidence
  • 3/28 8:30 am ET: 4QT 2023 GDP
  • 3/28 10:00 am ET: Mar F U. Mich. Sentiment and Inflation Expectation
  • 3/29 8:30 am ET: Feb PCE

Key incoming data February:

  • 2/01 8:30am ET 4QP 2023 Nonfarm Productivity Mixed
  • 2/01 9:45am ET S&P Global Manufacturing PMI January Final Tame 
  • 2/01 10am ET January ISM Manufacturing Mixed
  • 2/02 8:30am ET January Jobs Report Hot
  • 2/02 10am ET: U. Mich. Sentiment and Inflation Expectation January Final Tame 
  • 2/05 9:45am ET S&P Global Services & Composite PMI January Final Tame 
  • 2/05 10am ET January ISM Services Tame 
  • 2/07 9am ET Manheim Used Vehicle Index January Final Mixed
  • 2/09 CPI Revisions Tame 
  • 2/13 8:30am ET January CPI  Mixed
  • 2/14 PPI Revisions Tame 
  • 2/15 8:30am ET February Empire Manufacturing Survey  Tame 
  • 2/15 8:30am ET February Philly Fed Business Outlook Survey Tame 
  • 2/15 8:30am ET January Retail Sales Data Tame 
  • 2/15 10am EST February NAHB Housing Market Index  Tame 
  • 2/16 8:30am ET January PPI Mixed
  • 2/16 8:30am ET February New York Fed Business Activity Survey Tame 
  • 2/16 10am ET U. Mich. Sentiment and Inflation Expectation February Prelim Tame 
  • 2/19 9am ET Manheim Used Vehicle Index February Mid-Month Tame 
  • 2/21 2pm ET January FOMC Meeting Minutes Tame 
  • 2/22 9:45am ET S&P Global PMI February Prelim Tame 
  • 2/26 10:30am ET February Dallas Fed Manufacturing Activity Survey Tame
  • 2/27 9am ET February S&P CoreLogic CS home price Tame
  • 2/27 10am ET February Conference Board Consumer Confidence Tame
  • 2/28 8:30am ET 4QS 2023 GDP Tame
  • 2/29 8:30am ET January PCE Tame

Key incoming data January:

  • 1/02 9:45am ET S&P Global Manufacturing PMI December Final Mixed
  • 1/03 10am ET December ISM Manufacturing Tame 
  • 1/03 10am ET JOLTS Job Openings November Tame 
  • 1/03 2pm ET December FOMC Meeting Minutes Tame 
  • 1/04 9:45am ET S&P Global Services & Composite PMI December Final Tame 
  • 1/05 8:30am ET December Jobs Report Mixed
  • 1/05 10am ET December ISM Services Tame 
  • 1/08 9am ET Manheim Used Vehicle Index December Final Tame 
  • 1/11 8:30am ET December CPI Details Suggest Tame
  • 1/12 8:30am ET December PPI Tame 
  • 1/16 8:30am ET January Empire Manufacturing Survey Tame 
  • 1/17 8:30am ET January New York Fed Business Activity Survey Tame 
  • 1/17 8:30am ET December Retail Sales Data Strong
  • 1/17 9am ET Manheim Used Vehicle Index January Mid-Month Tame 
  • 1/17 10am EST January NAHB Housing Market Index Mixed
  • 1/18 8:30am ET January Philly Fed Business Outlook Survey Tame 
  • 1/19 10am ET U. Mich. Sentiment and Inflation Expectation January Prelim Tame 
  • 1/24 9:45am ET S&P Global PMI January Prelim Mixed
  • 1/25 8:30am ET 4QA 2023 GDP Mixed
  • 1/26 8:30am ET December PCE Tame 
  • 1/29 9:30am ET Dallas Fed January Manufacturing Activity Survey Tame 
  • 1/30 9am ET January S&P CoreLogic CS home price Tame 
  • 1/30 10am ET January Conference Board Consumer Confidence Tame 
  • 1/30 10am ET JOLTS Job Openings December Mixed
  • 1/31 2pm ET FOMC Rate Decision Tame 

Key incoming data December

  • 12/01 9:45am ET S&P Global Manufacturing PMI November Final Tame 
  • 12/01 10am ET November ISM Manufacturing Strong 
  • 12/05 9:45am ET S&P Global Services & Composite PMI November Final Strong 
  • 12/05 10am ET JOLTS Job Openings October Tame 
  • 12/05 10am ET November ISM Services Strong 
  • 12/06 8:30am ET 3QF 2023 Nonfarm Productivity Strong 
  • 12/07 9am ET Manheim Used Vehicle Index November Final Tame 
  • 12/08 8:30am ET November Jobs Report Tame
  • 12/08 10am ET U. Mich. Sentiment and Inflation Expectation December Prelim Tame 
  • 12/12 8:30am ET November CPI Tame
  • 12/13 8:30am ET November PPI Tame
  • 12/13 2pm ET FOMC Rate Decision Dovish
  • 12/14 8:30am ET November Retail Sales Data Tame
  • 12/15 8:30am ET December Empire Manufacturing Survey Tame
  • 12/15 9:45am ET S&P Global PMI December Prelim Tame
  • 12/18 8:30am ET December New York Fed Business Activity Survey Tame
  • 12/18 10am ET December NAHB Housing Market Index Tame
  • 12/19 9am ET Manheim Used Vehicle Index December Mid-Month Tame
  • 12/20 10am ET December Conference Board Consumer Confidence Tame
  • 12/21 8:30am ET 3QT 2023 GDP Mixed
  • 12/21 8:30am ET December Philly Fed Business Outlook Survey Mixed
  • 12/22 8:30am ET November PCE Tame
  • 12/22 10am ET: U. Mich. Sentiment and Inflation Expectation December Final Tame
  • 12/26 9am ET December S&P CoreLogic CS home price Tame
  • 12/26 10:30am ET Dallas Fed December Manufacturing Activity Survey Tame
  • 12/29 9:45am ET December Chicago PMI

Key incoming data November

  • 11/01 9:45am ET S&P Global PMI October Final Tame
  • 11/01 10am ET JOLTS Job Openings September Mixed
  • 11/01 10am ET October ISM Manufacturing Tame
  • 11/01 10am ET Treasury 4Q23 Quarterly Refunding Press Conference Tame
  • 11/01 2pm ET FOMC Rate Decision Dovish
  • 11/02 8:30am ET: 3Q23 Nonfarm Productivity Tame
  • 11/03 8:30am ET October Jobs Report Tame
  • 11/03 10am ET October ISM Services Mixed
  • 11/07 9am ET Manheim Used Vehicle Index October Final Tame
  • 11/10 10am ET U. Mich. November prelim Sentiment and Inflation Expectation Hot
  • 11/14 8:30am ET October CPI Tame
  • 11/15 8:30am ET October PPI Tame
  • 11/15 8:30am ET November Empire Manufacturing Survey  Resilient
  • 11/15 8:30am ET October Retail Sales Data Resilient
  • 11/16 8:30am ET November New York Fed Business Activity Survey Tame
  • 11/16 8:30am ET November Philly Fed Business Outlook Survey  Tame
  • 11/16 10am ET November NAHB Housing Market Index  Tame
  • 11/17 9am ET Manheim Used Vehicle Index November Mid-Month Tame
  • 11/21 2pm ET Nov FOMC Meeting Minutes Tame
  • 11/22 10am ET: U. Mich. November final Sentiment and Inflation Expectation Tame
  • 11/24 9:45am ET S&P Global PMI November Prelim Mixed
  • 11/27 10:30am ET Dallas Fed November Manufacturing Activity Survey Tame
  • 11/28 9am ET November S&P CoreLogic CS home price  Tame
  • 11/28 10am ET November Conference Board Consumer Confidence Tame
  • 11/29 8:30am ET 3QS 2023 GDP Strong
  • 11/29 2pm ET Fed Releases Beige Book Tame
  • 11/30 8:30am ET October PCE Tame

Key incoming data October

  • 10/2 10am ET September ISM Manufacturing Tame
  •  10/3 10am ET JOLTS Job Openings August Hot
  •  10/4 10am ET September ISM Services Tame
  •  10/6 8:30am ET September Jobs Report Mixed
  •  10/6 9am ET Manheim Used Vehicle Index September Final Tame
  • 10/10 11am NY Fed Inflation Expectations Mixed
  •  10/11 8:30am ET September PPI Mixed
  •  10/11 2pm ET Sep FOMC Meeting Minutes Tame
  •  10/12 8:30am ET September CPI Mixed
  •  10/13 10am ET U. Mich. September prelim 1-yr inflation Mixed
  •  10/16 8:30am ET October Empire Manufacturing Survey Tame
  •  10/17 8:30am ET October New York Fed Business Activity Survey Tame
  • 10/17 8:30am ET September Retail Sales Data Hot
  •  10/17 9am ET Manheim October Mid-Month Used Vehicle Value Index Tame
  •  10/17 10am ET October NAHB Housing Market Index Tame
  • 10/18 8:30am ET September Housing Starts Tame
  • 10/18 2pm ET Fed releases Beige Book Tame
  •  10/19 8:30am ET October Philly Fed Business Outlook Survey Tame
  • 10/19 10am ET Existing Home Sales Tame
  • 10/19 12pm ET Fed (including Powell) at Economic Club of New York
  •  10/24 9:45am ET S&P Global PMI October Prelim Tame
  •  10/26 8:30am ET 3Q 2023 GDP Advance Strong
  •  10/27 8:30am ET September PCE Tame
  •  10/27 10am ET Oct F UMich Sentiment and Inflation expectation Tame
  •  10/30 10:30am ET Dallas Fed September Manufacturing Activity Survey Tame
  • 10/31 8:30am ET 3Q23 Employment Cost Index Mixed
  •  10/31 9am ET August S&P CoreLogic CS home price Mixed
  •  10/31 10am ET October Conference Board Consumer Confidence Tame

Key incoming data September

  •  9/1 8:30am ET August Jobs Report Tame
  •  9/1 10am ET August ISM Manufacturing Tame
  •  9/6 10am ET August ISM Services Mixed
  •  9/6 2pm ET Fed releases Beige Book Tame
  •  9/8 9am ET Manheim Used Vehicle Index August Final Tame
  •  9/8 2Q23 Fed Flow of Funds Report Tame
  •   9/13 8:30am ET August CPI Mixed
  •  9/14 8:30am ET August PPI Tame
  •  9/15 8:30am ET September Empire Manufacturing Survey Tame
  •  9/15 10am ET U. Mich. September prelim 1-yr inflation Tame
  •  9/18 8:30am ET September New York Fed Business Activity Survey Tame
  •  9/18 10am ET September NAHB Housing Market Index Tame
  •  9/19 9am ET Manheim September Mid-Month Used Vehicle Value Index Mixed
  •  9/20 2pm ET September FOMC rates decision Market saw Hawkish
  •  9/21 8:30am ET September Philly Fed Business Outlook Survey Mixed
  •  9/22 9:45am ET S&P Global PMI September Prelim
  •  9/25 10:30am ET Dallas Fed September Manufacturing Activity Survey
  •  9/26 9am ET July S&P CoreLogic CS home price
  •  9/26 10am ET September Conference Board Consumer Confidence

Key incoming data August

  • 8/1 10am ET July ISM Manufacturing Tame
  • 8/1 10am ET JOLTS Job Openings Jun Tame
  • 8/2 8:15am ADP National Employment Report Hot
  • 8/3 10am ET July ISM Services Tame
  • 8/4 8:30am ET July Jobs report Tame
  • 8/7 11am ET Manheim Used Vehicle Index July Final Tame
  • 8/10 8:30am ET July CPI Tame
  • 8/11 8:30am ET July PPI Tame
  • 8/11 10am ET U. Mich. July prelim 1-yr inflation Tame
  • 8/11 Atlanta Fed Wage Tracker July Tame
  • 8/15 8:30am ET Aug Empire Manufacturing Survey Mixed 
  • 8/15 10am ET Aug NAHB Housing Market Index Tame
  • 8/16 8:30am ET Aug New York Fed Business Activity Survey Neutral
  • 8/16 2pm ET FOMC Minutes Mixed
  • 8/17 8:30am ET Aug Philly Fed Business Outlook Survey Positive
  • 8/17 Manheim Aug Mid-Month Used Vehicle Value Index Tame
  • 8/23 9:45am ET S&P Global PMI Aug Prelim Weak
  • 8/25 10am ET Aug Final U Mich 1-yr inflation Mixed
  • 8/28 10:30am ET Dallas Fed Aug Manufacturing Activity Survey Tame
  • 8/29 9am ET June S&P CoreLogic CS home price Tame
  • 8/29 10am ET Aug Conference Board Consumer Confidence Tame
  • 8/29 10 am ET Jul JOLTS Tame
  • 8/31 8:30am ET July PCE Tame

Key incoming data July

  • 7/3 10am ET June ISM Manufacturing Tame
  • 7/6 8:15am ADP National Employment Report Hot
  • 7/6 10am ET June ISM Services Tame
  • 7/6 10 am ET May JOLTS Tame
  • 7/7 8:30am ET June Jobs report Mixed
  • 7/10 11am ET Manheim Used Vehicle Index June Final Tame
  • 7/12 8:30am ET June CPI Tame
  • 7/13 8:30am ET June PPI Tame
  • 7/13 Atlanta Fed Wage Tracker June Tame
  • 7/14 10am ET U. Mich. June prelim 1-yr inflation Mixed
  • 7/17 8:30am July Empire Manufacturing Survey
  • 7/18 8:30am July New York Fed Business Activity Survey
  • 7/18 10am July NAHB Housing Market Index in-line
  • 7/18 Manheim July Mid-Month Used Vehicle Value Index Tame
  • 7/25 9am ET May S&P CoreLogic CS home price Tame
  • 7/25 10am ET July Conference Board Consumer Confidence Tame
  • 7/26 2pm ET July FOMC rates decision Tame
  • 7/28 8:30am ET June PCE Tame
  • 7/28 8:30am ET 2Q ECI Employment Cost Index Tame
  • 7/28 10am ET July Final U Mich 1-yr inflation Tame

Key data from June

  • 6/1 10am ET May ISM Manufacturing Tame
  • 6/2 8:30am ET May Jobs report Tame
  • 6/5 10am ET May ISM Services Tame
  • 6/7 Manheim Used Vehicle Value Index May Tame
  • 6/9 Atlanta Fed Wage Tracker April Tame
  • 6/13 8:30am ET May CPI Tame
  • 6/14 8:30am ET May PPI Tame
  • 6/14 2pm ET April FOMC rates decision Tame
  • 6/16 10am ET U. Mich. May prelim 1-yr inflation Tame
  • 6/27 9am ET April S&P CoreLogic CS home price Tame
  • 6/27 10am ET June Conference Board Consumer Confidence Tame
  • 6/30 8:30am ET May PCE Tame
  • 6/30 10am ET June Final U Mich 1-yr inflation Tame

Key data from May

  • 5/1 10am ET April ISM Manufacturing (PMIs turn up) Positive inflection
  • 5/2 10am ET Mar JOLTS Softer than consensus
  • 5/3 10am ET April ISM Services Tame
  • 5/3 2pm Fed May FOMC rates decision Dovish
  • 5/5 8:30am ET April Jobs report Tame
  • 5/5 Manheim Used Vehicle Value Index April Tame
  • 5/8 2pm ET April 2023 Senior Loan Officer Opinion Survey Better than feared
  • 5/10 8:30am ET April CPI Tame
  • 5/11 8:30am ET April PPI Tame
  • 5/12 10am ET U. Mich. April prelim 1-yr inflation Tame
  • 5/12 Atlanta Fed Wage Tracker April Tame
  • 5/24 2pm ET May FOMC minutes Dovish
  • 5/26 8:30am ET PCE April Tame
  • 5/26 10am ET U. Mich. April final 1-yr inflation Tame
  • 5/31 10am ET JOLTS April job openings

Still in a buy the dip regime as still gas in the tank. Money market cash reaches record $6.1T. Of $1.2T rise in past year, only $234 billion is bank deposit flight.

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Tom Lee, CFA
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