Last week’s vaccine-led rally was one for the record books—but is all that good news already priced in?

U.S. futures climb, but BofA analysts see a bearish turn coming.

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Good morning, Bull Sheeters. From Tokyo to Madrid, there’s plenty of green on the screens, with European bank stocks, in particular, leading the way forward.

Investors are in a risk-on mood even as COVID numbers worsen and more restrictions are mulled in some of the world’s biggest economies. But the markets are undaunted (that won’t be the last time you read that word in today’s Bull Sheet) as vaccine optimism proves to be the new predominant bullish force.

Let’s see where investors are putting their money.

Markets update

Asia

• The major Asia indexes are climbing again in afternoon trading with Japan’s Nikkei up 2%.
• Walmart’s retreat from Japan is just about complete after it sold off most of its stake in retailer Seiyu to KKR & Co. and Rakuten Inc. in a deal valued at $1.6 billion. KKR plans to build up Seiyu and return it to the public markets.
• In his final weeks on the job, President Trump is mulling further actions against China, including “protecting U.S. technology from exploitation by China’s military, countering illegal fishing and more sanctions against Communist Party officials or institutions causing harm in Hong Kong or the far western region of Xinjiang,” Bloomberg reports.

Europe

• The European bourses are in the green out of the gates with the Stoxx Europe 600 up 0.7% at the open.
• The pound and FTSE are higher even as the U.K. government strikes an unyielding tone as a huge Brexit trade deal deadline looms this week. Both sides have blown through so many deadlines, but there’s now talk Brits will see “the return of quotas and tariffs for the first time in a generation,” Bloomberg reports.
• Spain’s BBVA agreed to sell its U.S. operations to PNC Financial Services Group for $11.6 billion, “one of the largest bank tie-ups since the financial crisis,” the Wall Street Journal reports. BVVA shares were up nearly 15% in early-morning trade, lifting the Euro Stoxx Banks index by more than 3%.

U.S.

• U.S. futures point to a solid open. That’s after all three major exchanges finished the week on a high note, with the S&P 500 closing at an all-time high on Friday.
• Shares in Johnson & Johnson were flat in pre-market trading after the company announced its COVID vaccine advanced to a crucial third phase of testing in the U.K.
• We must be getting towards the end of corporate earnings season as the big retailers are up next. Target, Walmart, Home Depot and Lowe’s all report this week.

Elsewhere

• Gold is flat, trading around $1,890/ounce.
• The dollar is down.
• Crude is up, with Brent futures trading above $43/barrel.
• Bitcoin is up, trading near $16,250.

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Investor risk: bring it on (for now)

At the end of every week the “fund flows” reports land in my in-box on Fridays, almost always after I’ve pressed “send” on Bull Sheet.

I usually scroll through the reports quickly on my phone as I make coffee on Saturday morning. (Not to worry; I’ve already walked and fed the dog.) This is before my wife comes in and hijacks the radio to listen to the Rai 1 news bulletin, which always sets off grumbles about the Conte government.

The fund flows reports measure whether money has flowed into or out of the markets in the previous week, and so it’s a pretty good indicator for investor bullishness.

Last week was one for the bulls. Recap: the week had a lot of momentous news, including “the U.S. election result and positive news about Pfizer’s COVID vaccine,” Goldman Sachs writes. “Flows into mutual funds and related products suggest the events resulted in a large increase in investor risk appetite, with record net inflows into global equities, pro-cyclical rotations within fixed income, and a pickup in cross-border fund flows to emerging markets.”

Both Goldman and BofA Securities calculate the inflows this past week were at a near three-year high. The last time we saw so much cash entering the markets (as a percentage of sheer assets under management) was January, 2018.

The net-$45 billion that entered the markets, in straight-up dollar terms, was in fact a record. Most of that money went into U.S. equities. But there was also a noticeable uplift in money flowing into fixed-income (investment-graded and high-yield credit funds) and FX trades (away from the dollar).

Interestingly, BofA sees the apparent vaccine breakthrough as a big catalyst to flip sentiment going into the new year. In short, they think the market has largely priced in positive vaccine news. “We are sellers-into-strength into vaccine in coming months,” they write. “Peak positioning, peak policy, peak profits [are] likely coming [in the] months [ahead],” they tick off.

Here’s how they see the shift from 2020 to 2021 playing out:

I wish I could feel more bullish about the outlook. The COVID numbers in Italy worry me. And I’m even more spooked by the numbers in the U.S. where my mom, my siblings and so many of friends and colleagues live.

I admire anybody who can look forward, and make a statement about 2021. In my book, those who can are the true bulls.

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Postscript

Saturday mornings are also homework time. This week’s assignment: writing compositions. Sixth-grade stuff.

Or so I thought.

It’s all in Italian, and so it’s good practice for me to test my knowledge of Italian grammar, one of the true geeky pleasures of raising bilingual kids. There’s always something that I’m learning for the first time.

This week it was the word impavido, which my daughter slipped into her composition in writing about the similarities between Acchiles, he of the world-beating strength but tender heels, and Super Girl. (I’m guessing my daughter nicked the word from my wife; she applied it to Super Girl, so it was the feminine, impavida.)

The sight of the word sent me straight to the unabridged dictionary to find the precise English equivalent.

The root is Latin. Pavidus = “weak” (which derives from pavēre, “to have fear”). Im = not. In most dictionaries, impavido is translated as “fearless” or “undaunted.” But there’s an an even more precise English word for impavido. Yep, it’s “impavid.”

… as in “the impavid investor went long on tech and growth stocks in mid-March, and made a killing.”

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Have a nice day, everyone. I’ll see you here tomorrow. 

Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com

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