There have been “massive” outflows from capital markets in the past week, but although they brought Bank of America Merrill Lynch’s “bull and bear” indicator close to the “buy” signal, they haven’t managed to trigger it.
The past week has not been encouraging for investors, with many asset classes haemorrhaging funds at increased speed.
The week before that, on January 30, the Bank of America Merrill Lynch’s Bull/Bear indicator triggered a sell signal for the first time in five years, and markets sold off.
The Bank of America Merrill Lynch Bull/Bear indicator last week hit the highest level since its last sell signal, just as U.S. President Donald Trump took credit, once again, for the surge in the stock market.
Sentiment was getting even closer to triggering a “sell” signal in the stock markets last week, as investors’ enthusiasm climbed even more.
It’s hard to find a more bullish start to a year than this one. There were “blockbuster” inflows of capital into stocks, as well as corporate and emerging markets bonds, according to the latest analysis by Bank of America Merrill Lynch.
The recent risk rally still has legs — at least that’s the case judging by the Bull & Bear indicator compiled by Bank of America Merrill Lynch.
Tuesday’s sharp drop in global stock markets doesn’t make much sense taken in isolation. But the warning signs had been accumulating for a while.
The key question is: is this the beginning of the end of the bull market, or is it just another wobble?
It is official: this was the worst year for high yield bonds in the past 10 years.
Outflows totalling $8.6 billion year-to-date exceed the $6.2 of outflows from high yield bonds in 2011, when the eurozone was in full swing, analysts at Bank of America Merrill Lynch noted in their weekly report.