US Market Outlook: Withdrawing from Risk Assets That Achieved a “Dramatic” Rise - BofA Hartnett Dow Average Starts $19 Higher

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Withdrawing from risk assets that have achieved a “dramatic” rise - Mr. BofA Hartnett
As technical and macroeconomic headwinds are intensifying, investors should let go of risk assets that have recently risen significantly, advised Michael Hartnett of Bank of America (BofA). It is said that BofA's own “bull bear” index has sent out contrarian buying signals for the past 5 weeks. Historically, stock prices have risen 1-3% on the median since this buy signal began, and the current target for the S&P 500 is 4,500. Mr. Hartnett recommended selling at a “higher level than this.” We closed at 4508 on the 16th.

Foreign investors oversold US bonds in September - since May 2021
According to US Treasury data, foreign investors oversold US bonds worth 1.7 billion dollars in September. Oversales have been around since May 2021. Foreign investors' purchases in July-September were at a low level since March to May '20. Both China and Japan, which are important buyers of US bonds, reduced their holdings in September. China's holdings have declined the most in the past year, and Japan has fallen to a low level since March. Instead, Japanese investors piled up US agency bonds, which offered higher yields.

Walmart CEO points out the possibility of “deflation” in the US in the next few months
The biggest retailer in the world $Walmart(WMT.US)$The Chief Executive Officer (CEO) of used the term “deflation” in the financial results conference call on the 16th. CEO Doug McMillon said in a conference call with analysts that “in the US, we may be hit by deflation in the next few months.”

Is the stage set for the US stock year-end rally
Stock investors are getting Christmas presents a little earlier. It is the strong financial results of US companies for the fiscal year ending 7/9 (3rd quarter) and the US inflation rate, which is on a downward trend. However, such good news has already been factored in, and since there is tough competition with bonds with high yields, there is little room for seasonal stock appreciation compared to previous years.

Over 40% of semiconductor devices “for China”, 9 companies around the world from July to September, clear bottom
The sense that semiconductor manufacturing equipment companies around the world are bottoming out has intensified. In the financial results for the fiscal year ending 2023/7/9 (partly for the fiscal year ending August to October) of the nine major companies, sales and net profit surpassed the April-6 fiscal year with 8 companies, and it is expected that the recovery will continue moderately in the 10-12 fiscal year. China's aggressive investment in non-advanced semiconductors underpins demand, but the sales ratio to China has reached over 40%, and geopolitical risks are also smoldering.

Global semiconductor sales increased 1.9% in September for 7 consecutive months
The September global semiconductor sales value announced by the American Semiconductor Industry Association (SIA) was 44.89 billion dollars, up 1.9% from the previous month. It has been 7 consecutive months that it has surpassed the previous month. Although it was a 4.5% decrease from the same month last year, the rate of decline has shrunk with each passing month.

US MMF asset balance, record high of 5.73 trillion dollars - breaking records for 2 consecutive weeks
The asset balance of US money market funds (MMF) hit a record high for 2 consecutive weeks. Investors moved towards safe assets in response to interest rates exceeding 5% and rising volatility in the bond market.