Goldman Sachs recently predicted that pension funds may sell around $32 billion in shares to rebalance their positions. This will be the biggest rebalancing position adjustment since June 2023. Currently, the biggest buyer in the US stock market, corporate repurchases, is in the closing period. US stocks will have a long weekend this week, and trading volume is scarce, which may put additional pressure on the market.
The first quarter of 2024 is coming to an end. Goldman Sachs recently predicted that pension funds may sell about $32 billion in shares to rebalance their positions. This will be the largest rebalancing position adjustment since June 2023, ranking 89th in the past three years.
Looking back at last year, after a large-scale rebalance in June, US stocks hit their peak in July, then fell for three consecutive months in August, September, and October.
Wall Street's predictions about the scale of pension sales vary widely, but the large-scale sell-off is the consensus. UBS estimates that the current sell-off of US pensions is as high as 50 billion US dollars.
Generally, institutional investors and pension funds have strict asset allocation restrictions, and use the end of the month and quarter to review exposure to positions. The S&P 500 index has risen about 8.8% since the beginning of 2024, while global bonds have fallen by about 2%, which means these funds may need to sell more stocks than usual.
Currently, the biggest buyer in the US stock market, corporate repurchases, is in the closing period. Bank of America's latest data shows that during the Federal Reserve's pigeon release last week, most investors did not pay the bill. Only companies bought back US stocks. Retail investors sold US stocks for the 7th week in a row, hedge funds sold US stocks for the 3rd week in a row, and institutional investors sold US stocks for the first time in six weeks.
In terms of CTAs, important market participants are currently holding positions, but once the stock market falls slightly, it will trigger CTA sell-off.
It is also important to note that US stocks will have a long weekend this week. The US market will be closed on Friday, and trading volume will be scarce around Easter. Combined with the “fear of high” investors due to high valuations in US stocks, all of which may put additional pressure on the market.
Currently, the US stock market has not experienced a sharp decline in a long time. According to Bank of America statistics, since 1928, the S&P index has not recorded a cumulative daily decline of more than 2%; it is only 10 times longer than it is now.
According to the analysis, the above situation combined to form a pretty bad supply and demand situation, with large sell-offs and few purchases.
Editor/Somer