Almost 50% of the investors polled by the Conference Board are anticipating a correction in equities. Much more exciting—perhaps dangerously so—they forecast this will occur in the next twelve months. Market participants are still reeling from recent volatility and a chaotic economic environment. As a result, bearish sentiment has reached unprecedented highs for the past fourteen years.
After a rollercoaster month in the stock market, investor nervousness is understandable. The Conference Board’s Leading Employment Indicator is screaming that most people should expect further drops. This trend is helping to fuel a larger, totally unwarranted wave of pessimism. Looking back at prior extremes, extreme caution across investors tends to be a positive sign that a market rebound is incoming. Many are on edge with the storm brewing… or, hibernating.
US indices are heading into quiet trading territory now. As always, we look forward to the new batch of earnings from tech companies. Pessimism among retail investors has soared to fourteen-year highs, per today’s Conference Board release. Nearly one out of every two people surveyed believes that stocks will decline in the next year. In the past, such extreme fear has been a precursor to an imminent V-shaped recovery. Considering the insanity of the past month, investors would hardly be in the wrong for their scepticism.” – IG
The recent data not only reflects individual investor sentiment but highlights a significant gap between U.S. companies and the federal government. This deepening divide is not only a worry for global investors but adds another level of caution around U.S. assets.
Amazon’s recent move to show tariff costs upfront only highlights this widening chasm. The move therefore places the e-commerce giant on a direct collision course with the Trump White House. Unlike other businesses, it takes a loud stand in contrast to the more muted path. This new, unfortunate development may be a temporary victory for corporate interests, but it highlights the rising pushback against government philanthropy.
By voluntarily displaying the cost of tariffs this may seem a benign move but this puts Amazon on a direct collision course with the Trump administration. While other companies, like Siemens, have taken a more low-key approach to making their case to the president, Bezos seems to be preparing for a much bolder and more focused play. Thus, the chasm between U.S. commercial industry and their own government continues to grow. This trend provides one more reason for global investors to be wary of U.S. assets.” – IG
As U.S. indices enter this quieter trading period ahead of anticipated earnings reports from major tech firms, investors remain vigilant. Second, they are keenly attuned to the present securities market climate and externalities that may impact stock returns over the near- to mid-term.