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

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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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