Happy Saturday to everyone! 

As always, we spend our weekend digging into the CFTC data released every Friday after close to provide you with an overview of how traders, hedge funds and other market participants are positioning themselves, and try to derive what will happen next. Recently, optimism has evolved after the debt ceiling issue has been solved as well as the positive beat on NFP numbers yesterday, which spills over to positioning. We are still in the middle of an outright schizophrenic positioning divergence, where equities – and now also FX – are starting to get too optimistic despite tensions building in the economy, while commodity markets are screaming that a recession is coming. Clearly someone hasn’t gotten the memo. 

But without further ado, let’s head straight into our short and sweet overview of how CFTC traders positioned themselves in the past week: 

Equity Positioning

• Not surprisingly, the recent AI boom is clearly leading the equity space, with Nasdaq being the only index to show net long positioning, while other equity indices are still bearish positioning-wise. We have recently added a long Tech/AI position to our live portfolio as waning inflation and the current boom makes it a no-brainer in our opinion.
• The divergence between Nasdaq and S&P 500 positioning is interesting, and it seems like people are bearish on the real economy while extremely bullish on long duration equity assets. A prime cocktail for volatility in the next period of time.
• Equity positioning should still be viewed with skepticism, as basis-trading and smaller adjustments to portfolios are affecting the overall picture.
• Japanese equities are worth watching, as it will soon be one of the only places on earth with a decent liquidity outlook, led by positive money growth and a strong (or at least decent) economy.

Chart 1: Equity Positioning