A 'bull market in pessimism' is sweeping across financial markets

NOEL CELIS/AFP/Getty ImagesHands up if you’re bearish about the global economy.
  • Global stocks have been slammed over recent days. Global bond yields have also fallen sharply.
  • The moves largely reflect increased concern over the outlook for the global economy.
  • According to a recent poll of Twitter users from Topdown Charts, pessimism among investors if rife.
  • The group says “there’s basically a bull market in pessimism here”.

If used the correct way, Twitter can be a useful source of information, including on financial markets.

Here’s another example, courtesy of Callum Thomas from Topdown Charts.

Each week, Thomas asks his Twitter followers about their opinions on the outlook for global stocks and bonds, including whether their prevailing view is underpinned by technicals or fundamental factors.

With over 28,000 followers, Thomas gets an insight to how investors are feeling about what lies ahead.

Based on the latest survey he conducted last week, something stood out — there’s a bull market in investor pessimism underway.

The chart below combines respondents who are bearish about stocks on fundamental grounds, implying they’re likely to fall, with those who are bullish towards bonds based on fundamentals, indicating that yields are likely to fall.

Topdown Charts

In the relatively short period of time that Thomas has been conducting his Twitter polls, never before have so many followers expected that stocks and bond yield will fall.

“There’s basically a bull market in pessimism here,” Thomas said.

“As you can see, we’re in uncharted territory here. Fear has taken over on the outlook, in part reflecting weaker PMIs, an inversion of the US yield curve and geopolitics, just to name a few examples.”

So pessimism if rife, according to latest views.

However, while that is reflected in the moves seen in Asian markets on Monday, and those in Europe and North America late last week, Thomas says there may be some information in the latest data for contrarian investors among you.

“It is genuinely going to be interesting to see how this plays out, as to whether this bull market in pessimism is well justified, or a sign that the slowdown has nearly run its course,” he said.

If you want to participate in Thomas’ Twitter polls, you can follow him by clicking here.

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