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Roula Khalaf, editor -in -chief of the FT, selects her favorite stories in this weekly newsletter.
Good morning. Chinese officials declared Yesterday, they could do without American agricultural and energy imports should remain in place – another signal that Beijing does not back down in the face of American pressure and that we enter a massive game of “commercial war chicken”. Who do you think will flash first? Send us an email: Robert.armstrong@ft.cOM and aiden.reiter@ft.com.
How bad is the feeling of investors?
The best reason to buy actions at the moment is that almost everyone thinks that you shouldn't. When we suggested In the letter of yesterday according to which there were reasons – qualified – reasons of optimism on the American markets, we have received many answers like this, from a commentator going by “general assembler”:
A strangely optimistic socket. . . The big problem here is that the unthinkable things with devastating consequences are more and more likely to happen. The demolition of the international trading system is one thing, but what about American hyperinflation (if Trump is making its way on low interest rates), the default value of the United States (the crowd Maga would love the idea of not paying their dollars hardened to annoying foreigners in interest rates) and a “classic” war of conquest?
The oldest rule in the investment is to buy when pessimism reigns. So, when Financial Times, readers seriously talk about dis-aging, hyperinflation, default value and war in a single sentence, is it surely time to buy?
It is not only the FT comments section. The venerable survey of the American association of individual investors is as negative as ever. The graph below uses an average of three months of the survey bull's propagation. The AAII dates back 38 years, and it was as low as now only once during the 1990 recession. Calls provide the return to one year on the S&P 500. When the AAII strikes stockings like this, it is almost Always a great time to invest.
Brian Belski of BMO capital markets is the strategist of Wall Street which strikes the table the most harsh on a terrible feeling as a purchase signal. “The whole thing has become so binary – we have all decided that we are going to have a recession,” he said. In conversations with customers in Europe and Canada, the tone is completely negative in the United States, he said. “The best indicator (contrary) of all is seated in front of customers and looking them in the eyes and seeing how negative they are … They like the idea of the end of American exceptionalism … It is nothing other than emotion.”
Belski sees another good indicator against the tide in revision of lower profits for the next full year (that is to say 2026). Analysts' revisions are now extremely negative. Belski maintains that when this happened historically, consensus has exceeded the drawbacks and subsequent yields tend to be superior to the average. His graphic:
It's time to take care of yourself? It's not that simple.
First of all, there is the small problem of March 2008, when the AAII reached a deep bottom after the S&P fell by almost 20%. The index lost another 40% in the following 12 months. Feeling is therefore not a perfect opposite indicator. During a generational disaster, this is not helping (that said, the next lower of the survey, a year later, nailed the buttocks of the market and was one of the best moments to buy actions Never).
Then, it should be noted that almost all the low points of the feeling in the graph above came after the markets had greatly decreased from recent peaks. This was true in 1990, 1998, 2002, 2008, 2009 and 2022. With the market reduced to around 10% compared to the summits of February, this is not entirely true at the moment. So maybe investors should wait for a horrible feeling of feeling confirmed by a greater drop in the market?
Regarding this, while some retail investors moan for investigation, others (or perhaps the same?) Are you busy buying. According to Vandatrack, retail buyers bought the DIP aggressively at the beginning of this month, as shown by the purple columns of this graph:
Finally, wider measures of the feeling that includes not only survey data, but also market indicators such as short -term interest, margin debt and put / appeal ratio do not seem as terrible as the AAII. Here is our favorite index of Citi Levkovich, which fell quickly but only in the middle of its historic range:
We would certainly have more comfortable with the argument of the purchase on the Bad-felt if it was confirmed by a deeper drop and indicators based on the market, and if the impulse of buying the decline had been completely extinguished. We will wait for it to be a little darker before we start to expect at dawn.
That said, we are not as concerned about the problem of March 2008 – the possibility that we are at the dawn of such a bad disaster that feeling is no longer a useful indicator. We believe it for a fairly specific reason. The disturbances of the market in recent weeks, in our opinion, are the product of three things: require high -risk asset assessments, a difficult fiscal / monetary / inflationary backdrop and an inconsistent economic policy of the Trump administration.
Without a recession or a rout of the market, the first two should remain in place. On the third, we are reassured – if it is the right word – by the awareness that Trump's economic team is simply not so committed to their own policies not considered. Until now, when challenged by markets or polls, the administration's response has been to fold its cards. He fell back on Chinese electronic prices, he fell back on “reciprocal” prices on the rest of the world, then fell threat from Donald Trump to draw the Fed Jay Powell's chair. All this facing moderate market resistance. It is possible, with regard to extremely high prices on China, Trump will hold the line, as painful of the reaction of the markets and the economy. But we bet he will not.
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