MARKET CALL: Contrarian Indicators Showing Too Many Bears

We don't recall this ever happening before. During the past three weeks, The Economist has featured three very bearish cover stories suggesting that the dollar might be on the verge of collapse and that so might the US stock and bond markets along with the global economy (chart). Contrarians of the world, unite!

As extreme bearishness pervades world markets, the old maxim “It’s always darkest before the dawn” comes to mind, or rather: “Markets are always at peak bearishness before the bull.” Granted, there are valid reasons for losing sleep in recent weeks: Donald Trump's chaotic trade war, American consumers' depressed confidence readings, global stagflation chatter, panicky bond markets, Chinese deflation, China's preparations to blockade Taiwan, the Russia-Ukraine debacle, Iranian nuclear machinations, the skyrocketing price of gold, and mounting fears of another Great Financial Crisis.