Institutional investors selling into strength; European Managers Most Bearish

For the second month in a row the State Street Investor Confidence Index came in below 100 (the index uses State Street’s global custodian business to gauge investor sentiment based on exposures/trading, and readings below 100 indicate institutional investors are selling/reducing exposure to risk assets). The November reading was 97.1 – basically unchanged from 96.9 in October.  As the title suggests, this represents institutional investors selling into strength.
The selling has been driven by European institutional investors, with the index for Europe dropping to the lowest level since 2011.  Asian funds were also net-sellers for the second month in a row. North American investors however at 102.6 were meek net-buyers.  Overall at a global level it marks a pulling in of horns by institutional investors – and a reversal in stance from the seeming capitulation buying seen earlier this year.
Likely key on investors’ minds are: possibility of disappointment on US tax policy, geopolitical risks, monetary policy risks (e.g. Fed rate hikes, and tapering by other major banks), and of course relatively high stock market valuations in absolute terms.  Our view has been to stick to strategic benchmark weights (i.e. neutral overall), but to look for relative value, and this is working well so far.
At a global level institutional investors were apparently net-reducing exposure to risky assets for a second month in a row; pulling in their horns as the risk vs reward outlook becomes more complex.

Across the regions, interestingly it’s European investors who’ve been the most cautious, followed by Asian funds, while North American investment managers made minor net additions to risk assets.

For more and deeper insights on global economics and asset allocation, and some more good charts you may want to subscribe to the Weekly Macro Themes.  Click through for free look or a trial.

Should You Go All In On Water Like Michael Burry?

Water investments? Michael Burry was one of the first institutional investors to bet against the US subprime mortgage market in the mid-2000s, and today he’s concentrating all of his investment efforts on one commodity: water. Burry’s focus on water has attracted plenty of attention to the commodity in the investment community but trying to profit Read More

Previous articleOne Cryptocurrency Puts Bitcoin To Shame
Next articleMSI GL62M 7REX-1896US Gaming Laptop
Topdown Charts: "chart driven macro insights" Based in Queenstown, New Zealand, Topdown Charts brings you independent research and analysis on global macro themes and trends. Topdown Charts covers multiple economies, markets, and asset classes with a distinct chart-driven focus. We are not bound by technical or fundamental dogma, and instead look to leverage any relevant factor to capture the theme. As such, here you will find some posts that are purely technical strategy, some that just cover economics and data, and some posts that use multiple inputs to tell the story and identify the opportunities. Callum Thomas Head of Research Callum is the founder of Topdown Charts. He previously worked in investment strategy and asset allocation at AMP Capital in the Multi-Asset division. Callum has a passion for global macro investing and has developed strong research and analytical expertise across economies and asset classes. Callum's approach is to utilise a blend of factors to inform the macro view.