Euphoria No More.

Peak investor stimulation from mid-January has collapsed into desultory neutral readings for our global risk-love model.

Well, that’s one way to put it.

That rather amusing assessment of the extent to which investors aren’t feeling as ebullient as they were when the S&P was blowing through analysts’ year-end targets on a near daily basis back in January comes from BofAML’s latest “Investor Risk-Love” piece.

As a reminder, here’s how well things were going as of January 17:

SPX

Needless to say, the situation has deteriorated markedly since then thanks to two things. Here’s the first:

VIX

And here’s the second:

 

Right. “Nobody knows what’s going on.” An indisputable assessment of the current situation re: trade, foreign policy and the Mueller probe and part of the reason why the “Risk-Love” indicator mentioned here at the outset now looks like this:

RiskLove

As BofAML reminds you, “this indicator tracks positioning, put-call ratios, investor surveys, price technicals and volatility, spreads and correlations measures” and as you can see, it’s back to neutral after residing squarely in “Euphoria” territory for quite some time.

Why? Well in case the simplified version above (i.e. the VIX spike and Trump) isn’t good enough for you, BofAML gives you the more granular take, noting that “there has been a sharp decline in investor survey enthusiasm, a rise in volatility, and a rise in put-call ratios,” which have “all drug prior euphoric sentiment down to neutral levels.”

Here’s the breakdown:

CYE

Curb your enthusiasm. 

Literally.

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