Investor sentiment is set to rise this week on the diplomatic breakthrough between the US and Iran on reopening Hormuz. Details on the exact conditions of the deal and next steps are still unknown, but as far as investors are concerned, you had them at Hormuz – Japan opened up 5% on Monday at a new record-breaking high. Still, we’ve been here before with peace efforts in the Middle East, and details, when they emerge next week, will matter for durability and credibility. For the Iranian regime, time upgrades survival to triumph, not defeat, so the reality on the ground may be unchanged from before the war began. Again. But if “unchanged” means a return to oil at $60-$70, markets are fine with that. With war escalation off their call sheet for now, investors will keep an eye on deflating oi

Investor sentiment has not moved on from AI fears over the past 18 months so much as upgraded them. First came the fear that AI would replace humans, especially young university graduates just entering the workforce. Then came the fear that it would render parts of the SaaS sector obsolete, turning yesterday’s private-credit optimism into tomorrow’s refinancing problem as low-rate loans from 2021–23 approach a 2028 maturity wall. By November 2025, the market had moved on to a more familiar worry: revenues were not keeping pace with valuations, and the whole trade was becoming uncomfortably concentrated. Now the cycle has entered a more systemic phase. The concern is no longer just whether AI destroys jobs or business models, but whether its financing needs are so vast that it becomes a fun

A portfolio equals structure and activity. Structure is the framework: constraints, risk limits, sector allocations, and opportunity set. Activity is the continual revision of beliefs as new information arrives. Remove structure and you have speculation. Remove activity and you have a time capsule of yesterday’s convictions about a world the market has already left behind. For investors, the war in Iran ended on March 31st; they rarely wait for diplomatic closure. The Trump administration has not just once said it is negotiating an end to the conflict—it has said so repeatedly, inconsistently, and often alongside threats of escalation, roughly 6–10 distinct times since March 24, turning it into the Boy who cried Peace. For investors trying to forecast inflation, monetary policy or, for ext

We are ~12 weeks into the Hormuz closure and everyone is still talking about oil and how the energy shock is driving inflation. Two more supply shocks hide in the shadow of Hormuz: Urea, a key input into fertilizers, has already repriced sharply at $850/mt in April, up ~80% since February, and helium, a non‑substitutable process gas for semiconductors fabs - no high‑purity helium means yield loss or tool downtime. Fertilizer is the faster channel, already repricing and feeding into the next planting cycle, reinforcing second‑round inflation pressures. For helium, if disruption persists, even modest curtailments feed through with a lag given ~6‑month semiconductor lead times, pushing any chip supply shock into Q4. For inflation, energy was the first punch, fertilizer the second—helium is th

American voters were promised peace in Ukraine and no more foreign wars. So far, the administration has managed neither. It has been unable to pour oil on troubled waters in Ukraine, or water on troubled oil in Hormuz after its own foreign policy helped set it alight. The promise of peace and stability abroad was perhaps too lofty for contentment and the approach too chaotic for achievement. On the narrower test of regime change, the administration may now be 0-for-3: Venezuela, Iran, and Cuba. Meanwhile, the costs at home are mounting. Last week was dominated by the first of three planned Trump-Xi meetings. With the wars in Ukraine and Iran still imposing heavy economic costs, investors feared the administration’s doctrine of Peace through Strength could slide into Peace through Compromis

Summer-like volume in April suggests the outsized rally in US equities (99th percentile for the S&P 500) was driven by a minority of optimistic investors, firmly believing in their own heads—not the place that counts most, but important nevertheless—that negotiations between the US and Iran would succeed and Hormuz would soon reopen for business as usual. Those investors were in the middle of downward dog when they saw Trump’s Truth Social post: “TOTALLY UNACCEPTABLE.” Does it matter whether what we remember really happened? Or only that it mattered enough to be remembered? In the current US-Iran conflict, both sides are living proof that those are not the same thing. The US carries a tabulated memory of June 2025 and 28 February 2026: facilities damaged, the nuclear timeline set back,

Negotiators are, by definition, pullers of strings who work behind the scenes. Yet, despite both sides dispatching their éminence grise to Islamabad, a deal between the US and Iran remains elusive. Hormuz, that narrow oesophagus through which the world has, for decades, gorged itself on oil, remains dangerously clogged. The Trump administration tells anyone who asks – and plenty who don’t – that the blockade is working and that this vital organ will soon be back to normal with both function (traffic) and form (freedom of navigation) fully restored as Iran, it insists, is about to cave. For its part, Iran’s parliament warns to expect function to return, but not form. Hormuz, it insists, will not be born again: freedom of navigation will return, but as pay-to-play. The stalemate reflects the

Last week ended with investor sentiment still bearish in four markets, negative in another five, and neutral in Asia ex-Japan. The war in Iran, now entering its ninth week with a peace deal still out of reach, continues to dominate investor sentiment—though there are signs of bearish fatigue. President Trump tweeted that Iran had offered “a lot, but not enough”, while Iran’s Foreign Minister Abbas Araghchi said he does not believe the US is “truly serious about diplomacy”. The two sides remain far apart, each insisting the other’s plan has all the hallmarks of an indecent proposal. For investors, a win in Iran is not about reaching for the stars—it’s about fixing the roof (pun intended). Over the past two weeks, the drivers of bearishness have been easing. In the Gulf, headlines shifted fr

Welcome to week eight of Operation Epic Fury. To recap, while March – a month aptly named after the God of War – was defined by its bombing campaigns and consecutive escalations, April has thus far been about diplomacy as the Trump administration scrambles to restore the Strait of Hormuz to its pre-war factory setting. For investors, there has never been a more ambiguous war, goal-wise, end-wise, or otherwise. Bearish ROOF Scores across most markets since mid-February reflected the implementation of flight-to-safety strategies by the majority of investors. In March, each time they dared to step back into the market thinking the latest Presidential Tweet had cleared the uncertainty, they found the risk premium still wedged in place, like the sword in the stone. Only a contrarian, mightily r

Most people spend all their time worrying about the future or chasing the past. Investors, spend all of their time chasing the future or worrying about the past. Was our initial forecasts correct? Have circumstances changed? Should we rebalance? Could the future be different than what we thought it would be? For investors, the past is a funny thing. It has such power over future performance. Such sway. It’s shifty too. It morphs and changes with every news headline, even though in theory it should be set in stone. In investments, the past is all perspective. Investing follows a simple process. First investors forecast where returns will come from as best they can. They then construct a portfolio loading on these expected sources of return as much as possible given the constraints in their

Identifying investor sentiment is a bit like inferring the presence of an exoplanet we can’t see directly. Astronomers look for small gravitational distortions - or “wobbles” - in the paths of objects they can observe and whose orbital fields they’ve already mapped. Likewise, we can’t observe investors’ strategies directly, so to infer whether investors are positioning bullishly or bearishly, we look for comparable “distortions”: active returns in sector portfolios we can observe and whose factor exposures we’ve already mapped, classifying sectors as risk-tolerant or risk-averse. When a risk-averse sector rises as the market falls, it suggests investors are rushing to safety. According to those “wobbles,” Global Developed ex-US investors have been implementing bearish strategies for 39 con

The conflict in the Middle East remains the focal point as investors try to assess how far the latest oil shock will propagate through the global economy. Since the war began, a steady fog of misinformation has obscured the line between theatre and reality - on both sides. But the economic bill is becoming harder to overlook. Higher energy prices are feeding directly into inflation expectations, squeezing consumers, lifting transport and input costs, and further narrowing already constrained central‑bank policy paths. At the same time, signs of slowing activity are becoming more visible. Consumer sentiment data released last week showed a further deterioration in household confidence, reinforcing concerns that higher energy prices are already weighing on spending intentions. Attention now

The nature of markets is change, and the nature of investors caught in a bubble is denial. Last week, Jamie Dimon’s cockroaches got a plus‑one: Goldman Sachs’ David Solomon joined him in pushing back against the notion that ‘this time is different’ in credit, reminding investors that private credit didn’t escape the cycle — it just locked the exits. Recent tremors are a warning shot, not an anomaly. Redemption pressure, underwriting doubts, and JPMorgan’s tighter lending all signal that risk is re‑pricing — exactly what happens when a cycle turns after years of private credit firms quietly mainlining software loans during the easy‑money era. Sentiment isn’t static; it moves through like a storm system, and when it gains enough force, it drives markets into overshoot — bullish or bearish. I

After two weeks of trying to pick stocks through a thick fog of war — glued to news feeds, eating “al desco” (not a word, I’m aware), and attempting to work out what’s what — investors are finding themselves yearning less for the record‑setting markets that preceded Operation Epic Folly and more for calmer ones. The rallies aren’t as high, but the drawdowns aren’t as low either. And with the war in Iran now entering its third week — and the uncertainty it casts over the global economy stretching further — many see that as a healthy trade‑off. They don’t really miss flying high. Being a bird isn’t all sunshine and pooping from high places. Investor sentiment stayed bearish last week in eight of the ten markets we track, and UK investors, in particular, didn’t exactly keep calm and carry on.

Investor sentiment continued to slide this week, as hopes for clarity in the Middle East once again gave way to thicker and more oily fog. Investors are now decisively bearish in eight of the ten markets we track, with the remaining two - the US and China - clinging stubbornly to negative territory. And this snapshot was taken before oil reminded everyone of its geopolitical résumé by vaulting back above $100 over the weekend for the first time since Russia’s invasion of Ukraine. A bearish signal simply means that caution has won the popularity contest. Risk‑averse investors now vastly outnumber those still willing to take risk, leaving plenty of sellers and very few buyers at current prices. The adjustment mechanism is neither subtle nor new: sellers accept discounts to entice the shrinki

Investor sentiment stayed firmly on the defensive last week as fresh uncertainty stemming from the SCOTUS tariff ruling collided with a renewed bout of AI-related anxiety. By week’s end, sentiment was bearish in six of the ten markets we track, with another three (Australia, Global Developed Markets, and the US) slipping into very negative territory. Only China remained neutral, for now, as investors returned from a week-long Lunar New Year holiday. Investors knew that AI would be transformative - that it would deliver profound gains in productivity and accelerate progress across science and medicine. Last week, however, they were also confronted with a less familiar narrative: that AI may prove disruptive in economically negative ways that had not yet been fully considered. Investors are

Investor sentiment took a turn for the (much) worse last week across nearly every market we track, with the lone exception of China, where sentiment managed to climb back to neutral ahead of the week‑long Chinese New Year break - an upgrade from the previous week’s negativity. We now count six of the ten markets firmly in bearish territory, two more in the merely negative camp, and only two still clinging to neutrality. In the US, the sentiment picture is its own curiosity – the kind investors stare at for a while before deciding they’d rather not know how it ends. Risk tolerance has been flatlining since December, while risk aversion, having bottomed out in early January, has been steadily grinding higher. Concerns over Fed independence, SCOTUS unpredictability, and a geopolitical backdro

Investor sentiment weakened further last week. Bearish positioning persisted across six of the ten markets we track, deepened in two additional markets (Global Developed ex‑US, UK), and remained neutral / wait‑and‑see in the US. China was offline due to Lunar New Year holidays. Globally, investors are digesting softer US macro data, the SCOTUS ruling on Liberation Day tariffs, and rising geopolitical risk around Iran, as negotiations continue to stall without clear convergence. Absent further military escalation in Iran, attention now turns to Wednesday’s Nvidia earnings, which investors will look to for guidance and reassurance on the durability of AI‑driven valuations. Meanwhile, the ROOF Scores are flashing big warning signs in Global Emerging markets and Japan. The real question for AI

Over the past two weeks, investor sentiment weakened across most major markets except China, where it remained consistently negative, and the United States, where it held steady at neutral. Sentiment in Japan dipped slightly ahead of the snap elections, though the ruling coalition’s subsequent supermajority win should give Takaichi ample room to pursue her “proactive fiscal policy,” a likely positive for equities but less so for bonds. Is Canada next with a snap election (@Carney)? Meanwhile, geopolitical tensions involving Iran and renewed concerns about AI’s economic impact continue to restrain sentiment despite stronger‑than‑expected earnings so far (with 54% reported), which helped lift the Dow Jones Industrial Average above 50,000 for the first time in its 129‑year history. Investors

Investor sentiment was largely steady last week as markets balanced mixed economic signals against a shifting global backdrop, with Asia ex‑Japan and Global Emerging Markets staying bullish while Japanese investors remained defensive ahead of the February 8 snap election; in the US, a heavy slate of earnings across tech, consumer discretionary, communication services, and pharma is set to guide near‑term direction, while evolving trade discussions and policy dynamics continue to add uncertainty to the global outlook. Elsewhere, sentiment stayed largely neutral despite renewed geopolitical tensions, tariff threats, and the possibility of further military action in the Middle East. It’s the law of diminishing returns at work. Once investors have seen how a trade war or diplomatic tensions fl