Goldman Sachs fund flow expert Scott Rubner issued a 'revised watch' on major stock indexes in the United States before the earnings release of the seven technology giants, while analysts at independent investment research provider BCA Research informed clients that the US stock market 'will soon peak and bear market will begin'.

The BCA research team led by Arthur Budaghyan released a report titled 'Little Cash On The Sidelines' on Wednesday for clients. The report argues that the reason for the stock market peak is that the level of 'off-market cash' held by US retail investors and investment firms has hit a record low, which can only mean 'insufficient firepower'.

Budaghyan explains at the beginning of the report that the ratio of off-market cash to the market cap of the US stock market has dropped to a record low, indicating limited funds flowing into securities markets such as stocks and government bonds.

In light of this, Budaghyan said: 'The US stock market will soon top out and the bear market will begin. Global asset allocators should be overweight government bonds, not stocks. In addition, they should allocate cash in US dollars appropriately.'

To illustrate the situation of off-market cash, Budaghyan said: 'The absolute value of investable funds is still large, but it has been stagnant as the Fed unwinds its assets.' In addition, as the Fed's quantitative tightening policy reduces the supply of money, investable funds also decrease.

The conclusion drawn is that the low proportion of investable funds and the overvaluation of the US stock market may become the turning point for the rise of the artificial intelligence theme-driven stock market. Meanwhile, record stock buybacks by giant companies such as Apple, Microsoft, Alphabet and Nvidia are also the main factors maintaining high valuations. For example, Apple's buyback plan will account for 10% of repurchases in 2024. As mentioned above, Rubner from Goldman Sachs maintains a 'revised watch' on the stock market.

Since the launch of ChatGPT at the end of 2022, Nvidia's stock price has soared sevenfold, helping to drive a rebound in global markets dominated by large stocks. But concerns about the sustainability of these gains, as well as geopolitical tensions and changes in global monetary policy, are driving the market to search for new drivers. Investors are selling AI giants and snapping up lagging small stocks and defensive products.

Edited by Jeffrey