Fundamental sentiment and some clues from the bond market

Fundamental sentiment and some clues from the bond market
The latest weekly equity (and bonds) sentiment poll I take on Twitter has produced some interesting results this week.  I have done this poll each week for about a year now, and have collected the results in an excel sheet and thus am able to produce some charts and insights based on the emerging historical patterns and trends.  This week there’s a couple of things I wanted to point out.  First is the YTD high in net-bullish fundamental sentiment – which stands in contrast to the fairly weak reading in technicals driven sentiment [the survey differentiates between technical and fundamental driven/rationale sentiment].

Get The Timeless Reading eBook in PDF

Get the entire 10-part series on Timeless Reading in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Value In Beat Up Alternative Asset Managers?

Play Quizzes 4
Technicals sentiment appears to work better as a contrarian indicator, and fundamentals seems to work with a slight lead. Where this gets interesting is when you compare overall net-bulls for equities vs bonds. The rebound in equity sentiment has been mirrored in more bearish bond market sentiment - and then some.  In fact one interpretation could be that the bond market sentiment is flagging even better conditions to come for the equity market.  Of course it could just be another sign that Taper 2.0 is about to cause Taper Tantrum 2.0! This would represent a temporary setback for equities, but better macro conditions i.e. better growth and inflation (bearish for bonds) would be bullish for equities.
Fundamentals driven net-bullish sentiment is at it's best reading so far YTD - at the same time technicals sentiment has just bounced of extreme lows.  This presents an interesting setup.
Massive Inflows into Global Bond Funds

Bond market sentiment

Important note: the bond net-bullish sentiment line is on the second axis and is inverted i.e. represents bearish sentiment on bonds.  Typically the macro environment that is bearish for bonds is usually bullish for equities so I find this chart to be compelling.

542496 95c39a353bdb482fae1b9056bae87762~mv2

How A Weakening PE Market Serves As Another Sign Of A Weakening Economy

InvestAmid the turmoil in the public markets and the staggering macroeconomic environment, it should come as no surprise that the private markets are also struggling. In fact, there are some important links between private equity and the current economic environment. A closer look at PE reveals that the industry often serves as a leading indicator Read More

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

Updated on

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.
Previous article McDonald’s (And You) Strike Gold With New AI
Next article Wall Street has a Bad Rap with Millennials – Good Luck Fixing that

No posts to display