Tech remains a 'safe haven' as investors rotate out of banks and energy - Mizuho's O'Regan

March 17, 2023 9:28 AM EDT

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(Updated - March 17, 2023 9:31 AM EDT)

Mizuho's desk analyst Daniel O'Regan continues to view tech as a safe haven as investors rotate out of financials and energy. He highlights:

  • "Tech continues to benefit from the massive rotation out of Financials & now energy
  • Tech is testing 2year relative highs vs Financials and 7mo highs vs the XLE
  • While Financials volume remains north of 300%, Tech volume was up 40% vs the 20day average
  • We saw and heard there was massive demand in mega-cap tech across trading desks street wide.
  • FANG+ and Semi’s continue to lead tech and the broader market.
  • Overnight, Chinese ADR’s are up 2-3% after the China PBoC cut reserve ratio requirements 25bps.
  • The market is pricing 80% implied odds of a 25bp hike, a cycle ceiling of ~4.95% and a year-end rate of 4.23%.
  • Fed Ex earnings were bullish, but seems like most of the beat came from cost cutting.
  • The S&P is up 3.5% from Monday’s SPV lows, a lot of that was driven by TMT.
  • The NDX is up ~7.58% since the Monday lows, the best 4 day stretch since Jan’s massive cover rally.
  • We’ve been saying that Tech remains a SAFE HAVEN for many reasons and we think it continues
  • Safe Balance sheets, lower rates, already de-risked, compressed multiples, efficiency drivers, are all helping this Tech rally."

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