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Markets and sentiment continue to diverge. A shift has taken place among some market participants towards the speculative model and away from the fundamental one.

For the past few weeks, markets have been ignoring sentiment’s gradual pull-back and rallied, confident in their belief that neither central banks’ easy credit nor their massive asset purchasing programs will come to an end any time soon.

The week ended mixed with most markets showing a divergent mood between our Style and Sector ROOF Ratios.

Investor sentiment in the US, global developed markets, and Asia has been trying to convince markets they were wrong to keep rising, and that the premiums being paid for risk assets ran counter to investors’ deteriorating risk appetite.

The absence of clear economic and immunization success stories globally, has turned investors into hypochondriacs, debating who’s feeling bullish and who’s not and who’s not now but was a few weeks ago or isn’t bearish yet but thinks they might be soon, etc..

This week, sentiment in the US weakened further ahead of a potential reaping this coming Wednesday. But, as they did then when they chose to ignore those shenanigans two weeks ago, markets rose last week and seemed to refute investor sentiment by observing that their Propter Hoc isn’t even a Post Hoc (i.e., markets didn’t fall after the (first) violence).

It is safe to assume that most educated Times-subscribing US investors were rather flummoxed by last week’s storming of the US Capitol by pro-Trump supporters – some seen wearing farm animal headgear about which the less speculation the better.

Sentiment continued to improve in December on the back of growing optimism surrounding the vaccine news, until the last week of the year where it weakened for US, China, and Global Developed investors, triggering sell signals in those markets.

Analytics | Portfolio Risk Management
Qontigo ROOF™ Score Highlights: Week of December 14, 2020 (The last update for the year 2020)
Sentiment makes a beeline for the bullish zone like one races for the liquor cabinet on forced holiday weekends with the in-laws. US investors become ebullient while European and UK investor sentiment remains restrained by the prospect of a no-deal Brexit at the end of the month.

Global sentiment continues to rise as investors rush the border between Neutral and Bullish like it owes them money.

Sentiment continued to improve for a third consecutive week in all markets we track except the UK and Japan. The inflection point for sentiment was provided at the start of the month with several positive vaccine-related news and has continued to act as a deflator for risk aversion and a reflator for risk tolerance.

Multiple positive news regarding potential vaccines has helped sentiment rebound off its previous week lows except in developed Europe and the UK, where it continues to worsen.