ROOF Highlights

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.

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.

Increased uncertainty from rising new infection cases globally, the threat of further lockdown measures, the lack of an official victory in the US elections, and other Trumpisms, unnerved investors last week with Sentiment declining further in all markets we track. Global Developed and Emerging markets, Developed Europe, Asia ex-Japan, and the US are now all in bearish territory.

Sentiment bottomed out on US election day across the major markets of the US, Global Developed, Developed Europe, and Asia ex-Japan.

As both uncertainty and downside risk increase ahead of the election, US investor sentiment takes on a strongly risk-averse tone.

Sentiment continued to weaken across all markets we track, except the UK. Elsewhere, the Sector ROOF for the US market broke below the neutral zone into bearish territory (<-0.5) for the first time since April.

The divergence between our Style and Sector ROOF variants turned into a convergence on the weak side this week as investor’s risk aversion levels surged in the face of rising new infections across major markets hopes for a second fiscal stimulus package in the US before the elections (Nov 3) diminished.

Investor sentiment continued to diverge between our Style and Sector ROOF variants last week with the latter being more neutral than the former.