The State of Markets: “Short Term ‘Fear & Greed’ Model –> Back on SELL”
By Thursday’s close key US markets were eking out small gains for the week. The S&P500 was 0.6% higher on the week; the Dow Jones was up by 0.3%; while the NDX100 had fared better (+1.3%). By half way through the session on Friday, those markets were modestly lower (basically flat). US earnings, which began in earnest this week, have been a key factor pushing markets, and single names, higher. Key banks have been mostly beating expectations, along with high profile stocks like Netflix. With that (modest) strength in the S&P500 and NDX100, both markets have (just) broken out to the upside of their recent multi week trading ranges (i.e. from the first half of July).
Equities, though, are notably overbought relative to bonds (see chart below). In recent quarters, that’s been an effective indication that the equity rally is due a ‘breather’ (or indeed ‘some giveback’). The BAML FMS this week appeared to confirm that sense (i.e. ‘the market is due a breather’), reporting that there has been: ‘a record surge in risk appetite in the past 3 months’ (source: BAML FMS, July 2025).
Next week, the US quarterly earnings season continues with a large number of companies reporting. Key features include earnings from Alphabet and Tesla (both Wednesday); an ECB policy meeting (Thursday), which will be preceded by the ECB Bank lending survey (i.e. credit conditions on Tuesday). Elsewhere there’s a housing theme in the US with both existing home sales and new home sales out this week (Wed & Thurs). In the UK, it’ll be all eyes on the public finances data update, due Tuesday (given the concern about a potential UK fiscal crisis). Flash PMIs from across the globe will also be watched closely (on Thursday).
Key chart: Longview short term (‘1 – 2’ week) risk appetite scoring system vs. S&P500
Upcoming Important Data/Events This Week:
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Events: |
NB The US government shutdown is ongoing – and delaying the release of certain data points. Bank of England policy decision & meeting minutes (Thurs, 12pm); market holiday in Japan on account of Culture Day (Mon); RBA policy decision (Tues, 3:30am) followed by statement (4:30am); Riksbank policy rate (Wed, 8:30am). |
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Monday: |
US ISM manufacturing PMI (Oct, 3pm). |
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Tuesday: |
US JOLTS job openings (Sept, 3pm). |
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Wednesday: |
German factory orders (Sept, 7am); Eurozone PPI (Set, 10am); US ADP employment (Oct, 1:15pm); US ISM services PMI (Oct, 3pm). |
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Thursday: |
Eurozone retail sales (Sept, 10am). |
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Friday: |
Chinese imports, exports, & trade balance (Oct, 3am); US nonfarm payrolls, hourly earnings & unemployment data (Oct, 1:30pm); US Michigan Sentiment (November first estimate, 3pm). |
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Key earnings: |
Berkshire Hathaway, Palantir (Mon); AMD, Eaton, BP (Tues); SoftBank Corp, McDonald’s, Novo Nordisk (Wed); AstraZeneca, National Grid (Thurs); Mitsubishi Heavy Industry (Fri). |
Key Research
Global Macro Report, 28th October 2025:
“Germany: The Long Winter Is Ending A.k.a. Growth Momentum Set to Re-start”
On the surface, the German economy is struggling.
In particular, after a two-year recession (mid-22 to mid-24), the economy has once again started to contract (-1.1% annualised in Q2, fig 16). With that, employment is shrinking (just, fig 15); hiring expectations are down; industrial production fell sharply in August; and there are signs that the corporate sector is still under pressure. In particular, our ‘margins model’ for the German corporate sector shows that labour costs are growing faster than revenues. That’s typically associated with a recession in Germany. There’s also been debate in Germany about reforming the welfare state (cutting costs) and there are concerns about headwinds from a strong EUR and from US tariffs.
All of which begs the question: Is Germany rolling over into another recession?
Or, like other parts of Europe, is growth about to reaccelerate?
Key North American Macro Data & Events:
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Events: |
NB The US government shutdown is ongoing – and delaying the release of certain data points. BOC Governor Tiff Macklem Fireside chat (Mon, 6:30pm); Release of US Treasury quarterly refunding financing estimates (Mon, 8pm); Canadian Federal Budget released (Tues); speeches by Fed’s Williams in Frankfurt (Thurs, 4pm & Fri, 8am), Hammack at Economic Club of NY (Thurs, 5pm), Paulson on Consumer Finance Institute (Thurs, 9:30pm). |
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Monday: |
Canadian S&P Global manufacturing sector PMI (Oct, 2:30pm); US S&P manufacturing sector PMIs (October final estimate, 2:45pm); US ISM manufacturing PMI (Oct, 3pm); US construction spending (Sept, 3pm); US vehicle sales (Oct, 3pm). |
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Tuesday: |
US trade balance (Sept, 1:30pm); US JOLTS job openings (Sept, 3pm); US durable goods orders (September final estimate, 3pm). |
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Wednesday: |
US ADP employment (Oct, 1:15pm); Canadian S&P service sector PMI (October final estimate, 2:30pm); US S&P service sector PMIs (October final estimate, 2:45pm); US ISM services PMI (Oct, 3pm). |
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Thursday: |
US Challenger job cuts (Oct, 12:30pm); US weekly jobless claims (1:30pm); US quarterly unit labour costs and productivity growth (Q3, 1:30pm); US wholesale sales & inventories (Sept, 3pm). |
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Friday: |
US nonfarm payrolls, hourly earnings & unemployment data (Oct, 1:30pm); Canadian employment data (change in employment, unemployment rate & participation rate, for Oct, 1:30pm); US Michigan Sentiment (November first estimate, 3pm); US New York Fed 1 year inflation expectations (Oct, 4pm); US consumer credit (Sept, 8pm). |
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Key earnings: |
Berkshire Hathaway, Palantir, Vertex, Williams, Simon Property, Realty Income, IDEXX Labs (Mon); AMD, Shopify Inc, Arista Networks, Uber Tech, Amgen, Eaton, Pfizer, Marriott Int, Zoetis Inc, Axon Enterprise, Marathon Petroleum, Aflac (Tues); McDonald’s, Applovin, Qualcomm, Arm, DoorDash, McKesson, Emerson, Johnson Controls, Cencora Inc, Fortinet, Sempra Energy, MetLife, Allstate (Wed); ConocoPhillips, Parker-Hannifin, Airbnb, Transdigm, Vistra Energy, Cummins, EOG Resources, Air Products, Datadog, Warner Bros Discovery, Becton Dickinson (Thurs); Constellation Energy, KKR & Co, Duke Energy (Fri). |
Fig B: US ISM manufacturing & service sector indices
Key European Macro Data & Events
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Events: |
Speeches by ECB’s Lagarde in Bulgaria (Tues, 7:40am & 10am), Patsalides in Nicosia (Tues, 7:55am), Nagel in Berlin (Tues, 6pm), Villeroy & Nagel in Paris (Wed, 10am), Kocher in Vienna (Wed, 3pm & Thurs 8am), Schnabel in Frankfurt (Thurs, 6:10am), Lane on Washington panel (Thurs, 6:30pm), Nagel in Frankfurt (Fri, 12pm), Elderson in Frankfurt (Fri, 1:30pm); Riksbank policy rate (Wed, 8:30am). |
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Monday: |
HCOB manufacturing sector PMIs for Spain (8:15am), Italy (8:45am), France (8:50am), Germany (8:55am) & Eurozone (9am) – all October final estimates apart from Spain & Italy. |
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Tuesday: |
Spanish unemployment rate (Oct, 8am). |
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Wednesday: |
German factory orders (Sept, 7am); French industrial & manufacturing production (Sept, 7:45am); HCOB services sector PMIs for Spain (8:15am), Italy (8:45am), France (8:50am), Germany (8:55am) & Eurozone (9am) – all October final estimates apart from Spain & Italy; ECB wage tracker (9am); Italian retail sales (Sept, 10am); Eurozone PPI (Set, 10am). |
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Thursday: |
German industrial production (Sept, 7am); French private non-farm payrolls (Q3, 7:45am); Spanish industrial production (Sept, 8am); HCOB construction sector PMI for Euroarea (Oct, 8:30am); Eurozone retail sales (Sept, 10am). |
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Friday: |
German imports/exports, & trade balance (Sept, 7am); French trade balance (Sept, 7:45am). |
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Key earnings: |
Ferrari NV (Tues); Novo Nordisk, Siemens Healthineers, BMW ST (Wed); Rheinmetall AG, Engie, Deutsche Post (Thurs). |
Fig C: German industrial production (Y-o-Y %)
Key UK Macro Data & Events
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Events: |
Bank of England policy decision & meeting minutes (Thurs, 12pm); speeches by BOE’s Breeden (Tues, 11:40am & Wed, 4:15pm), Pill (Fri, 12:15pm). |
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Monday: |
S&P manufacturing sector PMI (October final estimate, 9:30am). |
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Tuesday: |
N/A |
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Wednesday: |
New car registrations (Oct, 9am); S&P service sector PMI (October final estimate, 9:30am). |
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Thursday: |
S&P construction sector PMI (Oct, 9:30am). |
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Friday: |
Halifax house price index (Oct, 7am). |
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Key earnings: |
BP (Tues); AstraZeneca, National Grid (Thurs). |
Fig D: UK S&P manufacturing & service sector PMIs
Key Asia-Pacific Macro Data & Events
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Events: |
Market holiday in Japan on account of Culture Day (Mon), RBA policy decision (Tues, 3:30am) followed by statement (4:30am); BOJ minutes from September meeting (Tues, 11:50pm). |
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Monday: |
Australian headline CPI (Oct, 12am); Australian ANZ-Indeed job advertisements (Oct, 12:30am); Australian household spending (Sept, 12:30am); Australian building approvals (Sept, 12:30am); Chinese Caixin manufacturing PMI (Oct, 1:45am). |
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Tuesday: |
Japanese S&P Global manufacturing sector PMI (October final estimate, 12:30am); Australian S&P Global service sector PMI (October final estimate, 10pm). |
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Wednesday: |
Chinese Caixin service sector PMI (Oct, 1:45am). |
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Thursday: |
Japanese S&P Global services sector PMI (October final estimate, 12:30am); Australian imports/exports, & trade balance (Sept, 12:30am); Japanese household spending (Sept, 11:30pm). |
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Friday: |
Chinese imports, exports, & trade balance (Oct, 3am). |
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Key earnings: |
Westpac Banking (Mon); Nintendo, Mitsubishi Corp., NTT Inc (Tues); Itochu Corp., Mitsui, SoftBank Corp (Wed); Recruit Holdings, Galaxy Entertainment Group, National Australia Bank (Thurs); Mitsubishi Heavy Industry (Fri). |
Fig E: China imports and exports (Y-o-Y %, 3m.m.a.)
This Week:
Longview on Friday, 31st October 2025:
“The Global Broadening”
Global Macro Report, 28th October 2025:
“Germany: The Long Winter Is Ending A.k.a. Growth Momentum Set to Re-start”
Daily Dose of Macro & Markets:
Daily Dose of Macro & Markets 30th October 2025:
“The Fed, ST SELL Signals & UK Growth Signs”
Daily Dose of Macro & Markets 29th October 2025:
“Fed Meeting –> Two Big Issues”
Daily Dose of Macro & Markets 28th October 2025:
“EZ Macro Data -> Spluttering”
Weekly Risk Appetite Gauge:
'Weekly Risk Appetite Gauge', 27th October 2025:
“Expect Breakout to Continue This Week”
Last Week:
Longview on Friday, 24th October 2025:
“S&P500 – False Breakout?”
Recommended Global Macro Trade Update, 22nd October 2025:
“Move SHORT Gold & Stay SHORT Gold vs. Silver”
The SHORT VIEW (& market positioning), 20th October 2025:
Daily Dose of Macro & Markets:
Daily Dose of Macro & Markets 23rd October 2025:
Daily Dose of Macro & Markets 22nd October 2025:
“Reeves’ Fiscal Headache: How Big is the UK Fiscal Shortfall?”
Daily Dose of Macro & Markets 21st October 2025:
“All Eyes on China’s Fourth Plenum [& Macro Data]”
Weekly Risk Appetite Gauge:
'Weekly Risk Appetite Gauge', 20th October 2025:
“Wave Two Relief Rally – Almost Complete”