What a difference a week makes. US equities had their best week since Nov ’23 following last week’s growth/hard-landing worries. Benign inflation data, followed by better than feared growth datapoints from WMT and Retail Sales helped S&P 500 recover its 50DMA and drive it to within 2% of all-time highs. In terms of factors, AI Enablers, Capex Beneficiaries, and Global Copper were among the themes that gained the most on the week, while Bond Proxies, CRE Exposed, and Expensive Defensives underperformed.

But while CTAs, who were behind the Aug 5 meltdown and were selling aggressively for the past 2 weeks, are now back and fully buying stocks again (as noted last week) to the tune of $20BN this week in flat tape alongside corporate buyback orders - with the buyback window fully open until Sept 6 - hedge funds, who correctly sniffed out the late July correction by selling for weeks ahead of it, are once again dumping after last week's furious rally.