Consensus of broad fear
Oct 10, 2022
Market participants can hardly get more fearful than they are today, at least as measured by the CNN fear and greed index ( pictured below ). The US jobless rate for September published Friday showed the unemployment had fallen back to its pre-pandemic low of 3.5% raising the likelihood of a 75 bps rate hike in November by the Fed. Looking at the fear gauges, we have however the strong impression that pessimism has become the broad consensus view within investors. While uncertainty is high, we believe market capitulation could be near as contrarians will start to try to call the bottom and tiptoe into the stock market again. The headwinds by the central banks remain however strong and corporate earnings will suffer from the slowing economic activity. We stay defensive in our portfolios.