Sentiment is one of the best market indicators out there. In fact, I’d argue that the only reason to be on the stock market internet is to get news and — perhaps more importantly — to gauge sentiment.
I don’t think I’ve ever felt it was so tough to figure out where sentiment really lies. Part of that is because the internet is now a bot-filled mess of AI slop and manipulative algos that reinforce your beliefs but I think the part of it is also that the effects of AI are so tough to pin down. People are simultaneously worried about disruption but optimistic that something economically good will come of this technology.
In any case, the confusion doesn’t appear to be limited to me as a couple of surveys out this week point to a vastly different view of where sentiment stands.
Yesterday I highlighted a chart from Goldman Sachs and its broadest tracker of various sentiment measures. That’s compiled into a single view and looks like this:
If anything, that’s bullish.
Meanwhile, Bank of American is out today with its latest fund manger survey and here is its broadest measure of fund manager sentiment, based on cash levels, equity allocation, and global growth.
It’s downright scary:
Some details:
- expectations highest since Jun 21
- investors most overweight commodities since May 22
- most overweight stocks since Dec 24
- most underweight bonds since Sep 22
Now normally the battle between Goldman Sachs and Bank of America is an easy decision but the BofA Fund Manager survey is one of the gold standards in markets and has a long, predictive history
