unexpectedutility.com

Institutional investors need more than just a correction; they need a profitable correction

The prospect of a Greek default has been poison to the sentiment of German domestic institutional equity investors. Since the rating agency S&P downgraded nine eurozone sovereigns in mid-January, they have been tenacious in their bearish beliefs even though the DAX has risen steadily over that time. Although in last week’s poll it appeared as if the more than 12 percent trough-to-peak equity rally had started to bite – perhaps the implications of the Greek debacle are not so crucial to the performance of German blue-chips after all – but this week the bears are back again. (more...)

Institutional investors refuse to buck the trend any longer, apparently convinced in their optimism by new Fed testimony

The medium-term investors polled every week by Börse Frankfurt have apparently rethought their strategies. Perhaps it was the fact that the DAX rose by another 3.5 percent last week, for a total gain of 12 percent since Standard & Poor's lowered the creditworthiness of nine European countries on January 13th. We now see a significant drop in the number of pessimists on our panel, nearly three quarters of which proceeded directly into the bullish camp. As a result, the level of optimism measured by the Bull/Bear Index reaches slightly above this year's average...

http://bit.ly/Ag1kH3

Investors’ predictions were all confirmed, except one

Stark divergence between owners and managers of German firms.

Rating agency tarnishes sentiment but not equities.

New Year rally may have brought more confidence than profits

11 January 2012. FRANKFURT (Börse Frankfurt). To be able to look back on five trading sessions where bad economic news was largely absent has been a rare treat for the institutional investors on Börse Frankfurt’s weekly sentiment panel. Last week’s US jobs numbers – heralded by an ADP forecast that was, by some estimates, eight standard deviations above forecast – were encouraging. Even though, analysts subsequently identified some worrying features in the breakdown of the statistics on December recruitment, the picture was one that suggested that unemployment wasn’t getting any worse...

http://www.boerse-frankfurt.de/EN/index.aspx?pageID=44&NewsID=6467

Investors are not really discouraged , they are just practical

"The early [DAX] gains are not solely remarkable because of the very disappointing end to 2011 – a fat minus of 15 percent for the DAX index – but also because domestic investors seem to have anticipated them so well. At the time of the last survey, a fortnight ago, the Bull/Bear-Index stood at its highest level in over five years; with a record low number of pessimists, the bullishness was quasi-unanimous."

http://www.boerse-frankfurt.de/EN/index.aspx?pageID=44&NewsID=6452