Pessimism stalks global markets: the indicator of the feeling of Bofa falls to historical minimums

He Bank of America (Bofa) warned about a drastic deterioration in the feeling of investors global, reflected in an abrupt fall of its risk and appetite indicator, known as Global Equity Risk-Lovewhich descended to the 15th percentile of its history, levels historically associated with voltage episodes and distrust in the markets.

In its latest report, the bank indicated that the investment feeling has experienced an almost total “washing” from the euphoric levels observed at the beginning of the year (Percentile 90), when the markets bet on policies promoted as tax cuts, deregulation and fiscal stimuli. Instead, they found a reality marked by tariffs, fiscal hardening and a growing political uncertainty, particularly in the United States.

“The temporal pause in tariffs announced by President Trump caused a slight rebound of relief, But the rebound in the feeling was marginal“Bofa said, stressing that the indicator barely rebounded to the 15th percentile after touching a minimum in the 9th last week.

Despite this mood debacle, the bank remarked that Extreme and generalized pessimism has not yet been achieved. Only 40% of the 18 Global Subindicators of feeling are at “panic” levels, which, according to analysts, is not enough to mark a real floor in the markets. “The rapid fall, followed by an equally fast rebound, may have prevented fear from spreading at all,” argues the report.

Expert looks converge

The survey was summoned by BUENBITthe broker that operates in the City of Buenos Aires and that pointed out in this regard: “Our look coincides with that of the Bofa. The sooner the investor that the global economy understands It is no longer governed by traditional foundationsbut has been comforted by a logic of power, more accurate will be their decisions. “

In this new scenario, lAs commercial, regulatory and monetary policies respond more and more to national security objectives, geostrategic projection and technological leadership.

For broker, economic diplomacy is replacing market rules And it is no longer about choosing sectors, but to understand what interests these sectors represent.

And it is that among the elements that contributed the most to the deterioration of the indicator are the reduction of positioning in emerging markets, a strong setback in the assignment of assets towards China, more defensive Put/call ratios and a drop in expectations between professional and retail managers. For example, exposure to China in the Global Manager survey fell from 38 to 2, while the feeling of brokerage firms fell from 62 to 28.

In addition, volatility in various markets – action, bonds and currencies – descended strongly, in a signal of lower risk appetite. Bofa’s Move index, which measures the expected volatility in Treasury bonds, fell from 39 to 7, and the VX of the S&P 500 collapsed from 29 to 7.

“The decline of the indicator Risk-Love From the 47 to 15 percentile in just one month it reflects a deep and fast deterioration in the investment mood, “warns the bank. And although a technical rebound is not ruled out, Bofa suggests that the current environment – with political shocks, commercial tensions and mixed growth signs – could keep the markets in defensive mode in the short term.

History shows that the minimum extremes in this indicator usually coincide with entry opportunitiesbut, as the report concludes, “the feeling has not yet fully capitulated.”

Strategies that recommend goodbit for context

• Overweight in sovereign assets of non -aligned countries with low exposure to geopolitical disruptions. We like Brazil a lot.
• Hedging active in global technological equity; Attention to companies with sales dependency in China.
• Buy on Dips in Pharma International; Selective short in American laboratories with greater exposure to the new import scheme.
• Active selection in Forex: Promote baskets with low correlation with the dollar and official intervention capacity (SGD, CHF).
• Infrastructure and energy such as geopolitical coverage: companies linked to reshoring, defense and critical infrastructure benefit from the new paradigm.

“Remember that economic diplomacy is replacing market rules. It is not about choosing sectors, but about understanding what interests these sectors represent,” he concludes.