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Bear/Bull Market

A smooth S&P 500 rally has crushed volatility, but stretched signals argue for buying protection. The index has climbed back to all-time highs with almost no drawdown, producing a steady decline in realized volatility. This has pushed implied volatility lower…
In response to trade uncertainty, global growth is cooling but not collapsing, supporting a cautious near-term view on risk assets. Trade disruption earlier this year raised fears of a global recession, but the data so far point to deceleration, not…

We maintain our 12-month US recession probability at 60%. However, until the “whites of the recession’s eyes” are more clearly visible, we would refrain from moving to a fully defensive stance.

The S&P 500 sits near all-time highs, but sentiment and positioning suggest euphoria has not driven this rally. Prices are elevated, yet the SKEW/VIX ratio sits at 8.3, or its 67th percentile. While not at extreme levels associated with reversals, it nears…

MacroQuant’s US equity z-score is dangerously close to the -1 threshold. Moves below that threshold have reliably coincided with equity bear markets in the past. As such, MacroQuant recommends an underweight on stocks, offset by an overweight on bonds and cash.

Investors should modestly underweight equities in their portfolios and look to turn more aggressively defensive once the whites of the recession’s eyes are visible. We think that will happen within the next few months.

Despite a strong rebound in equities, we remain defensively positioned as recession risks persist and market history warns against premature optimism. The S&P 500 has retraced 78.6% of its initial drawdown, a level that typically signals the end of a…
Our Counterpoint Strategists see no signs of recession or market fragility but remain skeptical of US superstar stocks. Winners of past tech cycles rarely lead the next, making Web 2.0 firms unlikely beneficiaries of the AI-driven rally. BCA’s Counterpoint…

MacroQuant warns that US equities are pricing in very little economic risk. The model is shunning equities and recommends a large overweight to cash.

MacroQuant warns that US equities are pricing in very little economic risk. The model is shunning equities and recommends a large overweight to cash.