Investor Sentiment Readings — Barron's

Investor Sentiment Readings

High bullish readings in the Consensus stock index or in the Market Vane stock index usually are signs of Market tops; low ones, market bottoms.

 
                              Last Week  2 Weeks Ago  3 Weeks Ago 
Consensus Index 
Consensus Bullish Sentiment   63%        63%          62% 
AAII Index 
Bullish                       29.2%      28.4%        33.3% 
Bearish                       40.5       47.3         42.9 
Neutral                       30.3       24.3         23.8 
Market Vane 
Bullish Consensus             68%        67%          67% 
TIM Group Market Sentiment 
Indicator                     45.6%      45.8%        46.2% 
Sources: Consensus Inc.; American Association of 
Individual Investors; Market Vane; TIM Group 
 
 

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By Randall W. Forsyth

It's quiet, too quiet.

For most of the past holiday-shortened trading week, that cliché from old Westerns seemed to describe the markets. As measured by options volatility in both stocks and bonds, an odd calm pervaded despite all the fast and furious headlines emanating from Washington and Europe.

The VIX — the Cboe Volatility Index for the S&P 500 — has remained below its long-term average of 20 since December and since President Donald Trump's inauguration over a month ago, according to Ulrike Hoffmann-Burchardi, chief investment officer of global equities at UBS Global Wealth Management. And through Thursday, the so-called fear gauge sported a 15 handle before rising over 18 on Friday as the Dow Jones Industrial Average wound up its worst week of the year.

Complacency also has extended to bonds, adds Stan Shipley, Evercore ISI's fixed-income strategist. "Despite a daily barrage of policy initiatives from Washington and higher readings of economic policy uncertainty, the MOVE index, a metric of implied Treasury volatility, has fallen sharply this year and is near prior low readings over the past two years," he wrote in a client note on Friday.

Behind the scenes, meanwhile, market professionals have been buzzing about a possible "Mar-a-Lago Accord" that would have other countries purchase special nonmarketable 100-year zero-coupon Treasury bonds. These securities would be effectively payment for protection provided by American armed forces while reducing the U.S. debt burden. It's a seemingly far-fetched idea, but some macro hedge funds already have placed bets on such a low-probability outcome.

Issuing a non-interest-bearing obligation would address the symptom, if not the underlying cause, of the great fiscal problem facing the U.S. As economic historian Niall Ferguson writes in The Wall Street Journal, spending more on interest on their debt than on the military has meant the demise of great powers through the ages, most recently Great Britain. In the U.S., military expenditures of $1.107 trillion in 2024 were eclipsed by interest expense of $1.124 trillion. And as noted numerous times in this space, the interest tab is certain to rise as old securities issued in the zero-interest-rate era now ended come due and are replaced with new ones yielding in the 4% range.

Whether other nations would accede to this deal is unknown, though it may be an offer they can't refuse. ("Nice little country you have there; shame if anything happened to it.") But Peter Tchir, macro strategist at Academy Securities, thinks such an arrangement could backfire. Freezing Russia's dollar reserves after its invasion of Ukraine sent a signal to international holders of greenback assets "that your dollars aren't necessarily yours," he wrote in a client note this past week. Forcing allies to accept non-interest-bearing U.S. bonds as the tab for defense could further the move out of dollar reserves internationally.

Finally, markets so far haven't registered the rise in inflation expectations. The latest sentiment survey from the University of Michigan found a surge in five-year inflation expectations to 3.5%, the highest since the mid-1990s. That's consistent with expected inflation derived from the Treasury inflation-protected securities, or TIPS, market, writes John Kolovos of Macro Risk Advisors in a client note. That's corroborated by the Bloomberg Commodity Index, which, he says, "is on the cusp of a major breakout."

Given these risks, UBS' Hoffmann-Burchardi writes, volatility is one asset class that is mispriced, "given the potential political, geopolitical, and technological shifts that are likely to unfold in the months ahead." She suggests capital preservation tacks, which would point to buying protective puts while the VIX remains subdued. Or follow the example of Warren Buffett and add to cash reserves.

Write to Randall W. Forsyth at randall.forsyth@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

By Randall W. Forsyth

It's quiet, too quiet.

For most of the past holiday-shortened trading week, that cliché from old Westerns seemed to describe the markets. As measured by options volatility in both stocks and bonds, an odd calm pervaded despite all the fast and furious headlines emanating from Washington and Europe.

The VIX — the Cboe Volatility Index for the S&P 500 — has remained below its long-term average of 20 since December and since President Donald Trump's inauguration over a month ago, according to Ulrike Hoffmann-Burchardi, chief investment officer of global equities at UBS Global Wealth Management. And through Thursday, the so-called fear gauge sported a 15 handle before rising over 18 on Friday as the Dow Jones Industrial Average wound up its worst week of the year.

Complacency also has extended to bonds, adds Stan Shipley, Evercore ISI's fixed-income strategist. "Despite a daily barrage of policy initiatives from Washington and higher readings of economic policy uncertainty, the MOVE index, a metric of implied Treasury volatility, has fallen sharply this year and is near prior low readings over the past two years," he wrote in a client note on Friday.

Behind the scenes, meanwhile, market professionals have been buzzing about a possible "Mar-a-Lago Accord" that would have other countries purchase special nonmarketable 100-year zero-coupon Treasury bonds. These securities would be effectively payment for protection provided by American armed forces while reducing the U.S. debt burden. It's a seemingly far-fetched idea, but some macro hedge funds already have placed bets on such a low-probability outcome.

Issuing a non-interest-bearing obligation would address the symptom, if not the underlying cause, of the great fiscal problem facing the U.S. As economic historian Niall Ferguson writes in The Wall Street Journal, spending more on interest on their debt than on the military has meant the demise of great powers through the ages, most recently Great Britain. In the U.S., military expenditures of $1.107 trillion in 2024 were eclipsed by interest expense of $1.124 trillion. And as noted numerous times in this space, the interest tab is certain to rise as old securities issued in the zero-interest-rate era now ended come due and are replaced with new ones yielding in the 4% range.

Whether other nations would accede to this deal is unknown, though it may be an offer they can't refuse. ("Nice little country you have there; shame if anything happened to it.") But Peter Tchir, macro strategist at Academy Securities, thinks such an arrangement could backfire. Freezing Russia's dollar reserves after its invasion of Ukraine sent a signal to international holders of greenback assets "that your dollars aren't necessarily yours," he wrote in a client note this past week. Forcing allies to accept non-interest-bearing U.S. bonds as the tab for defense could further the move out of dollar reserves internationally.

Finally, markets so far haven't registered the rise in inflation expectations. The latest sentiment survey from the University of Michigan found a surge in five-year inflation expectations to 3.5%, the highest since the mid-1990s. That's consistent with expected inflation derived from the Treasury inflation-protected securities, or TIPS, market, writes John Kolovos of Macro Risk Advisors in a client note. That's corroborated by the Bloomberg Commodity Index, which, he says, "is on the cusp of a major breakout."

Given these risks, UBS' Hoffmann-Burchardi writes, volatility is one asset class that is mispriced, "given the potential political, geopolitical, and technological shifts that are likely to unfold in the months ahead." She suggests capital preservation tacks, which would point to buying protective puts while the VIX remains subdued. Or follow the example of Warren Buffett and add to cash reserves.

Write to Randall W. Forsyth at randall.forsyth@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

By Teresa Rivas

It's not yet March — to the chagrin of parts of the country still in a deep freeze — but the phrase "In like a lamb, out like a lion" befits this past week's stock movements.

The S&P 500 index began the holiday-shortened week with two record closes — its second and third of 2025 — but then retreated on both Thursday and Friday. Ultimately, it was down 1.7% for the week to 6013, while the Dow Jones Industrial Average and the Nasdaq Composite both fell 2.5%.

Things started well enough, with the index grinding higher on Tuesday as the market continued to shrug off tariff worries. Tech names followed their Chinese counterparts higher, after China's President Xi Jinping met with business leaders over the weekend in a show of support for the tech space. Geopolitical worries put a dent in those gains, but not enough to keep the S&P 500 from reaching a new closing high.

It edged higher again on Wednesday, as investors were largely pleased with the minutes from the latest two-day meeting of the Federal Reserve's rate-setting committee. Although the central bank said it wants to see "further progress on inflation" before deciding to cut interest rates again, the lack of any curveballs was enough to help stocks reach another record.

Walmart spoiled the party, helping to sour sentiment on Thursday. The retail bellwether had a strong holiday quarter, as anticipated, but missed lofty expectations for its full-year forecast. The retailer expects sales to grow 3% to 4%, while analysts were looking for the higher end of that range.

Given its size, Walmart has one of the best reads on the health of the consumer. Management reiterated that U.S. shoppers were resilient, but the Street was clearly hoping for more reassurance. It may be prudent for the company to underpromise and over-deliver, but it doesn't send an upbeat message about the consumer at a time when ongoing inflation and tariff threats have led to concerns about spending, which, after all, powers the bulk of the U.S. economy.

"Inflation and economic uncertainties are expected to impact consumer spending, leading Walmart to adopt a conservative sales outlook for the coming year," writes Jay Woods, chief global strategist at Freedom Capital Markets. "They are the bellwether when it comes to discount retail, and any shift from them could speak volumes to the impact of inflation."

Alas, things didn't improve much with Friday's data. The final reading of the University of Michigan's consumer sentiment index for February came in at 64.7, below the 67.5 economists were modeling. That represents a 10% decrease from January, with all five index components falling this month, which only added to the gloom. Existing home sales in January also came in lower than expectations.

Still, it's worth noting that even with a lackluster end to the week, the S&P 500 is still up well over 2% this year. "While 2025 upside is a far cry from back-to-back 20%+ years, it is still nothing to scoff at," writes Citigroup U.S. Equity Strategist Scott Chronert. "Breaking strong sentiment will take more."

Take that, Walmart.

Write to Teresa Rivas at teresa.rivas@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

                                  High        Low      Close     Change 
                                  ----        ---      -----     ------ 
  S&P SmallCap 600 Index      1,426.66   1,375.61   1,378.64     -38.28 
  S&P MidCap 400 Index        3,192.70   3,092.82   3,101.90     -76.43 
  S&P 100 Index               2,991.91   2,938.86   2,940.70     -50.29 
  S&P 500 Index               6,114.82   6,008.56   6,013.13    -104.39 
 
 
Source: FactSet 
 

                                  High        Low      Close     Change 
                                  ----        ---      -----     ------ 
  S&P SmallCap 600 Index      1,426.66   1,375.61   1,378.64     -38.28 
  S&P MidCap 400 Index        3,192.70   3,092.82   3,101.90     -76.43 
  S&P 100 Index               2,991.91   2,938.86   2,940.70     -50.29 
  S&P 500 Index               6,114.82   6,008.56   6,013.13    -104.39 
 
 
Source: FactSet