Accessible version Investor Sentiment: Risk-Love Goldilocks persists Equity Strategy Global Risk-Love signals borderline exuberance Our contrarian sentiment gauge, Global Equity Risk-Love, continues to exhibit early signs of investor euphoria as global equity markets push toward record highs. The indicator has remained steady over the past month, holding at the 89th percentile relative to its historical range since 1987. While measures such as volatility across asset classes, correlations, spreads, and cash ...

Investment Rating - The report indicates a positive investment sentiment with the Global Equity Risk-Love positioned at the 76th percentile of its historical range since 1987, suggesting a favorable outlook for equities [1][17][23]. Core Insights - The Global Risk-Love indicator reflects a risk-loving sentiment among investors, with emerging markets showing potential for positive returns as they approach euphoric levels [4][5]. - Historical data suggests that when the Global Risk-Love transitions from depressed levels to euphoric levels, equities tend to perform well over the subsequent 12 months, barring a downturn in the global economic cycle [4][5]. - The report highlights a notable dispersion in risk sentiment across different regions, with some emerging markets like South Africa and Brazil showing strong bullish signals, while others like Indonesia and Thailand exhibit panic [2][14]. Summary by Category Global Risk-Love - The Global Risk-Love indicator is currently at 76, indicating a shift towards optimism but not yet euphoric [14]. - Historical performance shows that in 13 episodes since 1987, emerging markets equities have returned an average of 24% over the next 12 months after hitting euphoric levels, with only three instances of losses coinciding with global PMI downturns [5][9]. Regional Insights - Korea's Risk-Love has improved to the 27th percentile from panic levels earlier in the year, with historical data indicating median returns of 17% over the next six months following similar recoveries [3][13]. - Emerging Markets Risk-Love is at the 44th percentile, while Asia ex-Japan is at 40th percentile, both indicating a neutral stance [28][31]. - The Philippines and South Africa are in euphoric zones at the 93rd and 98th percentiles respectively, suggesting strong bullish sentiment [48][52]. Specific Market Indicators - The report notes that 85% of central banks are currently in easing mode, which is expected to support the growth cycle [10]. - The Risk-Love indicators for various countries show significant variations, with South Africa and Poland at 98 and 93 respectively, while Indonesia remains low at 5 [14][41].