Wall Street Lunch: Cash Is King In '23 (2024)

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With rates surging, $1.3 trillion flowed into cash, more than any asset class. (0:15) Microsoft's 'iPhone moment.' (2:06) Cathie Wood sheds remaining stake of Grayscale. (2:55)

The following is an abridged transcript:

Our top story today so far

Cash was indeed king.

Investors piled into cash this year as the Fed continued its unprecedented tightening cycle, while U.S. debt also saw record inflows.

BofA Securities strategist Michael Hartnett highlights in his "Flow Show" note that cash saw $1.3 trillion of inflows in 2023. A record $177 billion moved into U.S. Treasuries, while $162 billion flowed into investment grade bonds. Inflation-protected Treasuries, or TIPS, saw record redemptions of $37 billion as rates rose and inflation waned.

Global stocks saw inflows of $152B. U.S. large-cap stocks had inflows of $125 billion. Tech had inflows of $44 billion. And there was a record $73 billion in redemptions from U.S. value funds.

In today’s trading

Stocks are choppy, but the bias continues to be towards the green in absence of any major catalysts.

The major averages are up around +0.2%.

Among the early economic indicators, weekly initial jobless claims rose to 218K, topping the 210K expected and up from 206K prior. Continuing claims rose to 1.875 million from 1.861 million prior.

And pending home sales stalled in November, with the index staying at 71.6, compared with 0.8% growth expected. Year-over-year, pending transactions dipped 5.2%.

Lawrence Yun, chief economist at the National Association of Realtors, said that “Although declining mortgage rates did not induce more homebuyers to submit formal contracts in November, it has sparked a surge in interest, as evidenced by a higher number of lockbox openings."

Among active stocks

There’s more on the AI front.

Microsoft's (MSFT) "iPhone moment" is here, according to Wedbush. The bank bumped its price target to $450 from $425 after recent AI customer checks showed "game changing" monetization of Copilot, its generative AI feature launched earlier this year. Wedbush maintained an Outperform rating on the stock, which is on its "Best Ideas List" for 2024.

Baidu's (BIDU) generative AI chat tool Ernie Bot has amassed more than 100 million users, said the company's chief technology officer.

And Argus Research had bullish commentary for Intel (INTC), citing advancements in AI and its newly-announced foundry in Israel. Analyst Jim Kelleher, who boosted his price target to $60 from $42, said the fourth-quarter should start to show positive top and bottom-line comparisons.

In other news of note

Cathie Wood's ARK Next Generation Internet ETF – symbol ARKW -- dumped its remaining holdings of Grayscale Bitcoin Trust (GBTC) and acquired 4.3 million shares of ProShares Bitcoin Strategy ETF (BITO). The fund disclosed the end-of-year revamp late Wednesday.

ARK sold the GBTC shares out of "an abundance of caution," Wood said in an interview with Bloomberg Television.

"We're still as optimistic about bitcoin as we ever have been," she added

AKRW sold 148,885 shares of Coinbase Global (COIN), 231,102 shares of Block (SQ) and 281,284 shares of UiPath (PATH). The ETF also added 20,000 shares of the ARK 21Shares Active Bitcoin Futures Strategy ETF (ARKA).

For the year, the ARK Next Generation Internet ETF climbed 108%. Grayscale Bitcoin Trust surged 342% and Coinbase soared 451% on rising optimism, especially in the past month, that the SEC will approve a spot bitcoin ETF early next year.

And in the Wall Street Research Corner

The lists of what to buy next year keep coming.

Morgan Stanley’s equity sales team identified 24 stock longs for 2024, all with significant upside to the Wall Street consensus expected.

Among the names across a broad range of sectors are:

Biogen (BIIB), Intel (INTC), Sony Group (SONY), Seagate (STX), Target (TGT) and Disney (DIS).

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

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