By Amanda Cooper LONDON (Reuters) -Stocks rose on Tuesday, taking comfort from a possible easing in trade tensions between the U.S. and China and as nerves over credit risks in the banking sector ebbed, which in turn nudged gold lower. In Asia, the near-certainty of Sanae Takaichi becoming Japan's next prime minister briefly sent Tokyo's Nikkei to a record high and dented the yen. U.S. President Donald Trump said he expected to reach a fair trade deal with Chinese President Xi Jinping when the two meet ...

Core Insights - Michael James McDonald is a stock market forecaster and former Senior Vice President of Investments at Morgan Stanley, known for his advocacy of contrary opinion theory and investor sentiment measurement in price forecasting [1] - His first book predicted the end of the 18-year bull market (1982-2000) and the beginning of a long-term trading range market, which occurred between 2000 and 2009 [1] - McDonald later forecasted the end of the ten-year trading range market in 2010, signaling the start of another long-term bull market, which also materialized [1] - He emphasizes that a significant portion of a stock's price can be influenced by investor emotions, particularly fear and greed, and identifies a universal warning sign when too many investors have the same expectations [1] - Through his company, Sentiment King, McDonald continues to analyze investor psychology to forecast major stock trends [1]

Michael James McDonald is a stock market forecaster, author and former Senior Vice President of Investments at what is now Morgan Stanley. He is a long-term advocate of the theory of contrary opinion and the measurement of investor sentiment when forecasting price direction.His first book, " A Strategic Guide to the Coming Roller Coaster Market" was published in July of 2000, three months before the top of the dot comm market. On its cover was written, "How a new model of the stock market predicts the end o ...

Michael James McDonald is a stock market forecaster, author and former Senior Vice President of Investments at what is now Morgan Stanley. He is a long-term advocate of the theory of contrary opinion and the measurement of investor sentiment when forecasting price direction.His first book, " A Strategic Guide to the Coming Roller Coaster Market" was published in July of 2000, three months before the top of the dot comm market. On its cover was written, "How a new model of the stock market predicts the end o ...

Michael James McDonald is a stock market forecaster, author and former Senior Vice President of Investments at what is now Morgan Stanley. He is a long-term advocate of the theory of contrary opinion and the measurement of investor sentiment when forecasting price direction.His first book, " A Strategic Guide to the Coming Roller Coaster Market" was published in July of 2000, three months before the top of the dot comm market. On its cover was written, "How a new model of the stock market predicts the end o ...

Core Viewpoint - Michael James McDonald emphasizes the importance of investor sentiment and contrary opinion in stock market forecasting, suggesting that emotional factors like fear and greed significantly influence stock prices [1] Group 1: Background and Publications - McDonald is a former Senior Vice President of Investments at Morgan Stanley and has authored multiple books on stock market forecasting, including "A Strategic Guide to the Coming Roller Coaster Market" published in July 2000 [1] - His second book, "Predict Market Swings With Technical Analysis," was published in 2002, further establishing his expertise in market analysis [1] Group 2: Market Predictions - In 2010, McDonald predicted the end of a ten-year trading range and the beginning of a new long-term bull market, which subsequently occurred [1] - He asserts that when a majority of investors have the same expectation about a stock's price movement, it often leads to a contrary outcome, highlighting the significance of measuring investor expectations [1] Group 3: Sentiment Analysis - Through his company, the Sentiment King, McDonald focuses on studying and measuring investor psychology to forecast major stock trends, aiming to assist others in recognizing these trends [1]

Investment Rating - The report indicates a "sell signal" triggered by cash levels falling to 3.9% [14][15][86] Core Insights - Investor sentiment is the most bullish since February 2025, with a significant surge in profit optimism and risk appetite over the past three months [2][17] - 59% of investors believe a recession is unlikely, a notable shift from 42% in April, with 65% expecting a soft landing [3][26][27] - The most crowded trade is "short US dollar," with a net 20% overweight on Euro, the highest since January 2005 [5][55][62] Summary by Sections Macro Insights - 42% of investors expect Q2 2025 EPS to beat consensus, while 19% anticipate disappointment [30][36] - AI is perceived to be increasing productivity by 42% of investors [32][37] - Expectations for a global recession have decreased, with only 9% expecting a hard landing [26][28] Policy Insights - The trade war is viewed as the biggest tail risk, with expected final tariff rates on the Rest of the World rising to 14% [4][49][48] - 81% of investors forecast one or two rate cuts by year-end, with only 11% expecting a rate cut at the upcoming FOMC meeting [38][44] Asset Allocation - FMS equity allocation improved to a net 2% overweight, while bond allocation remains net 4% underweight [120][121] - Investors are most overweight Eurozone equities, with a net 41% overweight, the highest in four years [63][65] - There has been a significant increase in allocation to tech stocks, with a net 14% overweight, the highest since January 2025 [68][70] Investor Sentiment - The FMS cash level has dropped to 3.9%, indicating a sell signal, with historical median losses following such signals averaging -2% [14][20][86] - Risk appetite has surged, with a net 31% of investors expecting weaker global economic growth, a significant recovery from previous months [23][92] - 68% of investors believe high-quality earnings will outperform low-quality earnings [101][103]