Summary: Global equities are nearly 25% higher than in February 2016. A tailwind for this rally has been the bearish positioning of investors, with fund managers persistently shunning equities in exchange for holding cash.

That’s no longer the case.  Fund managers became bullish again in December, and remain so now. Optimism towards the economy has surged to a 2-year high. Cash remains in favor (a positive) but global equity allocations are now back above neutral for the first time in a year. Another push higher and excessive bullish sentiment will become a headwind. The main exception to this is emerging markets, which are now out of favor and a contrarian long.

Findings in the bond market are of greatest interest. Fund managers’ allocations to global bonds are now at prior capitulation lows. Moreover, inflation and growth expectations have jumped to the highest level since early 2011, after which US 10-year yields fell in half over the next several months.

The dollar is now considered the most overvalued in the past 10 years. Under similar conditions, the dollar has fallen in value in the month(s) ahead.

.…read and view analysis & status of 10 more sectors HERE

…related:

Major Markets at Turning Points