Good morning! It’s Wednesday and stocks continue to rip higher. Today we’re covering how fund managers are positioning for Trump 2.0, the 19,000% returns for the president’s memecoin, and Netflix’s record quarter. Plus, we’re sharing an interview with the CEO of a top retail trading platform. First time reading? Join 190,000 self-directed investors gaining an edge every morning. Sign up here. 

No cash on hand

Investors are signaling a serious vote of confidence in President Trump’s stewardship of financial markets. 

Global fund managers are so bullish on the new administration that they are holding the lowest level of cash in almost four years, according to Bank of America’s latest global fund manager survey. 

So far in January, the firm’s clients’ biggest allocation is squarely in equities, while investors have left just 3.9% to cash — the lowest since June 2021.

Historically, when cash allocations drop below 4% it’s a “sell” signal, strategists wrote in a note Tuesday.

In any case, institutional enthusiasm for stocks remains high. Forty-one percent of BofA clients are overweight global stocks, while investors cut allocations to bonds to the lowest since October 2022. 

Here are the three most crowded trades: 

1. Long Magnificent 7

2. Long US dollar

3. Long crypto

When asked which asset class will be the top performer of 2025, 27% of fund managers said US equities, followed by bitcoin at 14 percent.

What’s intriguing, too, is that fund managers’ allocations to European stocks jumped to net 1% overweight this month, up from 22% underweight last month. That marks the second-biggest jump for the region in the last 25 years, the survey said.

All of the above tracks with how stocks performed on the first trading day of Trump 2.0.

Each of the three benchmark indexes finished Tuesday in the green, more than 80% of the S&P 500 climbed, and small-cap stocks surged to a one-month high. 

Both bitcoin and gold also hovered near records.

While bears remain concerned about stretched valuations and speculative bubbles, the fundamentals underpinning stocks continue to come in stronger than expected.

The Magnificent 7, for instance, is expected to see fourth-quarter earnings growth of 21.7% year-over-year, FactSet data shows. 

The S&P 493 will see a similarly strong 9.7% for the same stretch — the highest since the second quarter of 2022. 

What’s your outlook for the S&P 500 in 2025? Reply directly to this email or let me know on X @philrosenn.

Elsewhere:

🦑 Netflix posted a record quarter. The stock hit a record high after hours and cashed in big on its hit series Squid Game and its first major live sports event. In the quarter, Netflix added 18.9 million customers, more than double what Wall Street expected. The platform now boasts over 300 million global subscribers and this marks the last time it will publish quarterly subscriber numbers. (Hollywood Reporter)

💰️ Holders of the TRUMP memecoin are racking in big returns. The cryptocurrency launched by the president’s team on Friday has minted millionaires and achieved listings on major exchanges like Robinhood and Coinbase. While some traders have already sold for profits, data from Nansen shows many of the largest investors continue to hold with unrealized gains as high as 19,000%. (Business Insider)

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🤖 Tech leaders pledged up to $500 billion in US AI investments. On President Trump’s first full day in office, OpenAI, SoftBank, and Oracle pledged a mountain of cash toward building AI-related infrastructure over the next four years. Executives from the companies, including ChatGPT creator Sam Altman, announced the news from the White House Tuesday. (WSJ)

Interview:

I sat down with Leif Abraham, the co-founder of the investing platform Public, to discuss how financial markets are changing under Trump’s second administration, what retail traders are buying, and the rise of AI in finance:

Rapid-fire:

• Elon Musk said the FTC’s concern over Microsoft’s $13 billion investment in OpenAI “confirms” his claims that the partnership is anticompetitive (Bloomberg)

• Oracle stock surged over 7% after participating in the $500 billion AI investment (Yahoo Finance)

• TD Bank is looking to sell $9 billion of mortgages to comply with a new asset cap imposed by US regulators (Reuters)

• Lawsuits are rolling in trying to challenge Trump’s flurry of executive orders (Business Insider)

• Tesla stock slipped as much as 3% Tuesday after Trump scrapped a pro-EV policy that was put in place by Biden (Yahoo Finance)

• President Trump pardoned Ross Ulbricht, the founder of Silk Road, who was sentenced to life in prison in 2015 (CBS)

• Shares of Trump Media & Technology tumbled 11% on Tuesday (WSJ)

• MicroStrategy announced it purchased another 11,000 bitcoin for $1.1 billion, bringing its total holdings to 461,000 worth $29.3 billion (Benzinga)

• President Trump ordered Federal workers to return to office in-person, five days a week (Reuters)

Last thing:

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