Episode summary
Chase or Fade the Rally?
The Markets
· · Hosts: Chris Hussey · Guests: Bobby Molavi
Summary
US equities’ rebound to all-time highs is being driven by a willingness to look through a crowded list of macro and geopolitical risks, according to Bobby Molavi. He said the market has repeatedly rewarded buying dips since 2020, and argued that resilient corporate earnings, AI-related capex, and fiscal, monetary, and regulatory tailwinds are keeping the equity backdrop constructive even as energy shocks, higher rates, and private-credit concerns create noise.
On positioning, Molavi said retail has become a major and sticky force, with about 30% of daily traded volume and more than 50% household ownership in US equities. He said recent stress saw de-netting and CTA selling, but not broad de-grossing, and that big pools of capital largely held through the volatility.
Asked whether to chase or fade the rally, he chose to fade it. Molavi said the market looks delicately poised, is already pricing in progress on conflict resolution, and may be vulnerable to a blip. He also expects IPO activity, de-equitization through buybacks and M&A, and continued global diversification, while preferring a “halo theme” around heavy assets, scarcity, and old-economy industrial exposure.
Key takeaways
- Molavi said US equities are still being supported by AI capex, resilient earnings, and the habit of buying dips through shocks since 2020.
- He put retail participation at about 30% of daily traded volume and said household ownership above 50% has been a sticky tailwind.
- He chose to fade the rally because markets look delicately poised and are already pricing in conflict resolution.
- He expects IPO supply to pick up, especially in large-cap tech, which could force investors to make room by selling other stocks.
- Molavi said the “halo theme” is heavy assets and low-obsolescence businesses such as oil, hard materials, and supply-chain-critical industrials.
Notable quotes
“retail participation has grown to around 30 percent of the daily traded volume. Household ownership is above 50 percent”
“So, fade the rally, if I had to choose”
“we've yet to really see it scale in IPOs”
“I think for me right now, the halo theme is one that I'm very focused on. Heavy assets. Low obsolescence”
How the episode opens
This is The Markets. I'm Chris Hussey and today is Thursday, April 16th. And I have with me in the London trading floor, Bobby Molavi, who is head of European execution services within Global Banking & Markets.
Bobby, thanks so much for joining us. Hey Chris, thanks for having me. All right, Bobby.
Let's cut to the chase here because between the software selloff and then the private credit swoon and now the energy crisis, it seems like everything went wrong this year. And yet, the market's at an all-time high. Explain this disconnect between stocks and all the stuff to worry about.
Yeah, it's pretty amazing to think that we've hit a new all-time high in spite of an energy crisis, oil hitting 120 at one point, you know, kind of all of the disruptions that have come from what's going on in the Middle East, as well as other kind of idiosyncratic factors like the software concerns from AI disruption, several of the front end rates moves, the private credit concerns. I think ultimately, the equity market is looking through all this noise in the short term and that's been a winning strategy since 2020. Whether it was COVID or tariffs or inflation, the market has paid off in either buying the dip or focusing on the long-term.
And I think the underlying growth backdrop good. Corporate earnings, whilst there may be some disruption because of what's happening in the Middle East, generally have stayed resilient. And I think the equity market decided to look through this.
And some of that is underpinned by the AI kind of tailwind from capex, as well as some of the fiscal monetary and regulatory tailwinds we thought we would see at the beginning of January. Good points around the fundamentals. From your vantage point though, sitting there in Europe and running our execution service, you also get to see a lot of the technical side and positioning.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- us equity rally
- earnings outlook
- market timing
- profit taking
- economic conditions
Companies and tickers mentioned
- GS
- Goldman Sachs
Watch the episode
Watch “Chase or Fade the Rally?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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