Two days ago we reported that stock market optimism among both professional and retail investors had hit the highest level since the crash of 1987...

... with a recent E-Trade survey disclosing the 8 out of 10 retail investors were certain that stocks would rise in Q1.

And, according to the latest EPFR fund flow data as compiled by Bank of America, they have been putting their money where their euphoria is.

According to BofA CIO Michael Hartnett, the 4-week inflows into equities was not only "thundering", it was the largest ever. This is the result of a massive $23.9bn weekly inflow into equities which brings the 4-week inflow to stocks to the biggest ever, $58bn as shown in Chart 1 below...

... and there was even some good news for active managers: the 4-week inflows to active equity funds @ 4-year high, which incidentally is not saying much.

Unsatisfied with mere quantification, Hartnett also qualified the euphoria as follows: "Happy New "Fear of Missing Out": super-frothy start to '18…133% annualized return for SPX thus far in Jan implies 6220 year-end index level."

Incidentally, a 6220 year end on the S&P is not all that insane: as Goldman showed last November, if the exuberance is not rational, as Goldman's strategist David Kostin suggested then but rather irrational, then the vampire squid predicts that the S&P 500 would trade at 5300 by year-end 2020, over 2000 points above its "rational exuberance" 2020 target of 3,100.

Why not? After all this may very well be the final central bank bubble, after which there will be no more bubbles, something which Deutsche Bank suggested back in December:

It is clear that the spiraling trajectory cannot continue indefinitely; it has to stop at some point beyond which there will be no more bubbles. In many ways, it looks like the post-2008 represents the last lapse. A new game has to be reinvented for the old future to materialize, or a different paradigm altogether has to take over.

What else?

Well, as we noted last week, the one thing all BofA clients want to know is "what level of bond yields will cause an equity correction"; Hartnett also notes that the most FAQ by private clients is "how do I position for inflation."

Meanwhile, there are epic rallies in US Transportation (TRAN index at all-time high vs Utilities), Chinese & Japanese banks, global energy stocks all indicate classic late-cycle laggard-chasing.

And speaking of inflation, everyone is scrambling to position accordingly: there were record inflation flows, specifically inflows to TIPS funds hit $1.5bn, while financials saw $1.7bn inflows vs $1.2bn redemptions from REITs, while the "stabilization of battered REIT & UTIL indices likely first sign of bond yield stabilization."