Goldman Sachs expert Scott Rubner, who studies fund flows, predicted over a month ago that the s&p 500 index would far exceed 6000 points by the end of this year. This Friday, his most optimistic forecast was raised again, with expectations for the s&p reaching 7000 points, stating, "I placed an order for a SPX 7K hat." The SPX 7K represents the s&p index rising to 7000 points.

Although the large cap us stock market started lower on Monday and only reversed a week-long downward trend by Thursday, Rubner's report released on Friday predicted, "The us stock market will rebound starting next week and by the end of the year, the s&p 500 index will reach 6200 points."

Rubner, serving as the global markets managing director at Goldman Sachs, wrote at the beginning of the report:

"We are entering the best seasonal period of the year for the us stock market."

He then said: "I think not many people will be eating turkey on Thanksgiving next Thursday while shorting the s&p index."

Rubner pointed out that the enthusiasm of retail investors for stocks and cryptos is accelerating, and the bullish momentum so far this year may increase the leverage of the retail investor group. From the perspective of fund flows, the following characteristics have recently emerged:

• The monthly fund inflow into us stocks has reached a historical high. Since the us elections, there has been a significant influx of funds into us stocks within three weeks.

In the past three weeks, the total inflow of funds into usa stocks was approximately 105 billion dollars, with an inflow of 32.752 billion dollars two weeks ago, 55.781 billion dollars last week, and 16.41 billion dollars this week. Additionally, the inflow of funds into usa stocks in the last three months has reached a three-month high since 2021.

• Investor sell-offs of usa technology giants have temporarily suppressed the upward momentum.

There has been a rotation in usa stocks, with giants being sold off and funds being poured into small cap stocks. Goldman Sachs' prime brokerage business's hold positions data indicates that the proportion of hold positions in the tech giants known as 'the seven sisters' (Mag 7) in the total net exposure of usa stocks has hit a one-year low. Hedge funds are turning to other ai concept stocks and larger beneficiaries of Trump policies.

• The demand for stocks from usa companies continues to rise, as investors manage supply and bulk trading calmly. November is the month with the strongest corporate demand.

Currently, the total amount of 46 registered stock issuance transactions is 13.6 billion dollars. The amount for 19 unregistered issuance transactions is 3.8 billion dollars.

Rubner's report from two weeks ago reaffirmed that companies are the number one buyers in usa stocks, and mentioned that Goldman Sachs estimates that the value of stock buybacks executed in 2024 will be 960 billion dollars, with the value of stock buybacks in November expected to be 100 billion dollars.

This report reaffirms that Goldman Sachs' trading desk data shows that since 2007, November has historically been the month with the largest buyback scale of the year, accounting for 10.40% of annual buyback volume. It was mentioned that currently, Goldman Sachs estimates that 95% of s&p 500 constituent companies are in the buyback open window period, with the next buyback silence period expected to start on December 23. Since the beginning of this year, the scale of funds authorized to buy back has reached 1.105 trillion dollars, an increase of 17% compared to the same period last year.

Rubner is bullish on the future of usa stocks, stating that historically, the usa stock market tends to enter a phase of even greater growth after entering a good year, and January is a key time of the year for capital deployment in usa stocks. From 1996 to 2022, January has usually been the month with the highest stock activity.Mutual fundsAnd the months with the highest inflow of funds into etfs.

Regarding seasonal factors, Rubner stated that the usa stock market has been in a consolidation phase this week, and historical data from 1928 shows that this has been a typical situation for the usa stock market during this period over the last century. Next week, it will usually kick off the year-end rally, including some of the best trading days of the year, until Thanksgiving.

Data from since 1928 indicates that the usa stock market also rises entering December. Many investors will return to work on that Monday, December 2nd, after Thanksgiving, at which point there will be 20 trading days left in the 2024 calendar year. Another interesting phenomenon is that in the years of us presidential elections since 1928, the usa stock market's rebound typically lasts until early January of the following year, tapering off before the presidential inauguration day.

Rubner pointed out that the trend of the s&p 500 this year is similar to that after the 2016 election. It is expected that the s&p will rise again in December driven by rotation and the re-inflation theme in the usa stock market.

Moreover, coming up are the holidays of Thanksgiving, Christmas, and New Year's Day, with the global stock market holidays following one after another. From a liquidity perspective, the barrier to shorting the stock market is very high.

Editor/ping