9 Charts Showing Market Bears Are Waking Up

Just when you thought it was safe to stride safely through the forest of stock market investing (hey – banks, Trump, hope, reform, stimulus, earnings, and Trump again); the bears are coming out of hibernation

The calm in stocks worldwide is giving way to concern, as Bloomberg reports investors in Europe and the U.S. are rushing to hedge against declines and a Credit Suisse index flashing a warning as the list of economic and political obstacles grows. As we detailed earlier,

“While put demand has certainly increased over the past week, the biggest mover actually comes from the call-side,” Xu said in a report dated Wednesday. “Falling call skew indicates investors see less potential for market upside going forward, perhaps in recognition of the increased macro and political headwinds.”

 

And VIX is considerably decoupled from stocks…

There’s no shortage of potential concerns, notes Bloomberg. Tensions over North Korea's nuclear program have intensified days after the U.S. fired missiles at a Syrian airfield. There’s uncertainty over the outcome of the French election, with the first round scheduled for April 23, and in Britain doubts are emerging on whether the economy can withstand the political shocks the Brexit negotiations will bring.

Other signs of investor nervousness include:

The S&P 500 broke below its 50-day moving average for the first time since the election…

 

The cost of hedging against a 5% tumble in the S&P 500 Index over the next month has increased at the fastest rate since June’s Brexit referendum, relative to options betting on a gain of that magnitude.

 

Correlation in US and European equity markets is resurgent. That’s something that often happens in times of crisis, and is an expression of concern that forthcoming political events will dominate market movements and overshadow company-specific forces.

 

And risk is rising everywhere, not just stocks…

 

Safe-Haven Assets are heavily bid…

The benchmark 10-year U.S. Treasury is starting to behave as it did in the run-up to the Brexit vote, as yields fall while volatility climbs in one-month options, according to the Merrill Lynch Move Index…

 

Gold is closing in on $1300 once again, erasing the post-election losses and breaking through its 200-day moving average…

 

Finally, if the message is still not getting through, here is why – perhaps – some investors are getting nervous…

Cognitive Dissonance?

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