Bears are now contrarian!

The equity market has now gotten so excited with its manic reflation that it is recreating the Fed’s inflation problem. Good job!

The Market Ear has more on the wild sentiment swings.

That went fast: being bearish is now finally contrarian

In mid June we ran a series of thematic emails (premium subs only, sign up here) asking ourselves rhetorically whether or not the market was too bearish and systematic strategies way too short. The tactical backdrop in the market is now very close to being perfectly inverse to mid June. In our emails “Is this the bottom” (June 20) and “Will they be forced to chase the squeeze ” (June 27) among others we laid out the squeeze logic. Since then a lot of things have changed, but what is the backdrop here:

1. we are getting awfully close to the “inverse” mid June set up where bears are giving up and shorts are evaporating as the systematic crowd chases things higher and higher

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.