feb 18  welcome to the home for realtime coverage of markets brought to you by reuters reporters you can share your thoughts with us at marketsresearchthomsonreuterscom as part of the most recent american association of individual investors aaii sentiment survey read more  aaii asked its members to share their thoughts about how supply chain issues are impacting their investing decisions aaii reported that about 60 of respondents said supply chain issues are having little to no impact on their decisions since many are longterm investors and supply chain issues are perceived to be a shortterm problem against this 12 of respondents stated that supply chain issues are negatively impacting their investment decisions around 9 cited a specific stock impact mentioning their own strategy of moving toward or shifting away from certain kinds of stocks meanwhile 8 of respondents said that the supply chain is having a positive impact on their decisions presenting them with buying opportunities roughly 3 of respondents have mixed feelings about how supply chain issues are impacting them and 2 of respondents are neutral only 2 of respondents mentioned a specific bond impact arising due to supply chain issues from the survey here are a couple of investor quotes on the matter “i am thinking more about investing in energy and financial stocks there already is a substantial investment in their supply chain hydrocarbons money and credit maybe i should look at utility stocks along with certain real estate investment trusts reits” “i think the supply chain issues are transitory but i am not sure how to invest based on that belief except to discount those issues in figuring the longterm value of assets” yield curve inversion might not be as scary as thought 1300 est1800 gmt one of bofas key themes has been that the economy can withstand a normalization of fed policy a bearish counterargument is the risk of a yield curve inversion signaling a recession is likely according to a bofa economic weekly research note yield curve inversions have been a relatively good predictor of recessions however the bofa analysts also say that upon closer inspection inversions are not as reliable as is thought inversions often happen well before the recession and the signal turns off before the recession arrives in fact bofa notes that there have been several false signals over the years additionally they say that the 2019 inversion did not predict the covidinduced recession in 2020 since the economy was strong ahead of the pandemic bofa adds that there may be a stronger argument for discounting an inversion in the current cycle given that the long end of the us treasury curve is heavily distorted bofa says that the fed has deliberately depressed the long end of the curve with its asset buying program at the same time very low bond yields off us shores are exerting downward pressure on us yields the upshot is that the term premium has now dropped into negative territory the yield curve can now invert even if the market expects no rate cuts from the fed this was also the case in 2019 which leads bofa to conclude that expectations of a flat funds rate is not a good predictor of recession here we suggest investors heed chair powells advice the curve is not irrelevant but it must be interpreted carefully a big inversion of the yield curve would be a troubling sign but there is nothing magical about zero january was a sharply volatile month for nearly all markets and this was reflected in divergences between the performance of various hedge fund strategies hedge fund data provider pivotalpaths dispersion indicator stood at 63 in january its third highest reading since 2009 global macro strategies were the strongest performers as per pivotalpath with an index tracking them up 23 systematic strategies including macro managed futures and equity quant were able to capitalize on the flattening yield curve rally in the energy complex and other factor trends pivotalpaths report says the wells fargo investment institute which recently upgraded their view on macro hedge funds to favorable expects continued strong performance inflation divergent economic growth and monetary policy and of course geopolitical risks  us tensions with russia and china  all have the potential to increase volatility but more importantly to generate crossasset trends that are ripe for macro trading wells fargos justin lenarcic wrote in a note on monday as bond markets adjusted to expectations of a hawkish federal reserve creditfocused hedge funds outperformed pivotalpaths credit index was positive for the month led by the structured  mortgagebacked securities and relative value substrategies both of which generated returns of about 1 overall hedge funds did post smaller losses than other sectors of the market pivotalpaths composite index a measure of overall hedge fund performance lost 13 in january in comparison the sp 500 spx lost 52 and the nasdaq ixic tumbled nearly 9 unsurprisingly equityfocused funds were the worst performing strategies last month with notable losses in smallcaps and sectors including technology and biotech wall streets semiconductor stocks took another hit on friday with intel slumping to its lowest level in over a year and the main chip index set to end a tumultuous trading week close to where it began intel dropped 55 after a turnaround pitch from its senior executives late on thursday failed to impress investors intel in recent years has fallen behind taiwan semiconductor manufacturing co in leadingedge manufacturing technology and lost market share to advanced micro devices amdo and nvidia nvdao at least three brokerages cut their price targets on intel following its presentation to deal with its loss of transistor leadership share loss to both competitors and customers and lower margins intc plans to spend its way into a turnaround jefferies analyst mark lipacis wrote in client note we dont think investors will afford the stock a higher multiple until intc produces concrete evidence these investments will generate a return the philadelphia semiconductor index sox is off around 2 and is on track to end the week down about 01 the index on wednesday was briefly up 6 for the week but uncertainty about a potential war between ukraine and russia helped deflate those gains worries about rising interest rates have also hurt growth stocks intels stock is now at its lowest level since november 2020 it has fallen 27 since february 2021 when pat gelsinger took over as ceo winning the support of investors and analysts expecting the intel veteran to navigate the company out of its manufacturing troubles also weighing heavily on the sox index on friday nvidia and micron technology muo are both falling about 4 what history says about geopolitics and the market 1100 est1600 gmt as the world anxiously monitors tensions between russia and ukraine and reactions by other countries including the united states glenview trust cos chief investment officer bill stone examined market moves around past geopolitical crises for clues as to what investors might expect stone looked at 29 different geopolitical crises starting with wwii and found that on average stocks were higher three months after a geopolitical shock and following 66 of events they were higher after only one month the odds that stocks will be higher increases as time passes after the event in addition stocks sometimes jump sharply after a crisis so getting out of the market could have significant opportunity costs stone cautioned of course there have been outliers in the form of more severe spillovers into the economy and financial markets for example during world war one the new york stock exchange nyse was closed for about four months and stocks fell by approximately 20 once it reopened and then following the 911 attacks in the united states financial markets did not reopen until september 17 when the sp 500 fell almost 5 in a day so while investors should be prepared for additional volatility history does seem to suggest that stock declines associated with geopolitical fears are generally a temporary setback and an opportunity to buy at discounted prices but stone  who is also careful to mention the horrible human toll of these events  advises that investors keep enough lowrisk assets like cash and highquality bonds to support living expenses during unexpected disruptions here is glenviews list of historical events and market reactions us stock indexes are little changed in early trade on friday as investors keep a wary eye on developments in ukraine heading into a long weekend this after us secretary of state antony blinken agreed to meet russian foreign minister sergei lavrov next week provided russia has not invaded first which appears to have somewhat calmed markets globally and dented demand for safehavens read more most major sp 500 spx sectors are green so far though changes are relatively modest across the board communication services splrcl and real estate splrcr are among the top risers energy spny and tech splrct are on the losing side here is your early trade snapshot bulls look like an endangered species 0915 est1415 gmt bullish sentiment in the latest american association of individual investors sentiment survey aaii fell to its 29th lowest reading since the survey started in 1987 with this pessimism increased while neutral sentiment decreased aaii reported that bullish sentiment or expectations that stock prices will rise over the next six months fell 51 percentage points to 192 well below the historical average of 380 optimism was last lower on may 25 2016 178 bullish sentiment is unusually low for the sixth consecutive week and below its historical average for the 13th consecutive week bearish sentiment or expectations that stock prices will fall over the next six months popped by 77 percentage points to 432 staying above the historical average of 305 this is bearish sentiment’s 13th consecutive week above the historical average it is also the fourth time in the past five weeks that pessimism is unusually high neutral sentiment or expectations that stock prices will stay essentially unchanged over the next six months slipped by 26 percentage points to 376 this is the ninth time out of the past 11 weeks that neutral sentiment is above its historical average of 315 aaii noted that for the sixth consecutive week bullish sentiment is unusually low aaii added that historically the sp 500 index has gone on to realize aboveaverage and abovemedian returns during the six and 12month periods following an unusually low reading for bullish sentiment with these changes the bullbear spread slid to 24 from 111 last week read more  meanwhile barclays analysts are taking note of bullish sentiments sub20 reading saying it has only happened on 31 occasions since 1988 so 30 out 31 times after the aaii bull index fell below 20 equities went up over the next 6 months barclays strategists said so if history is any guide based on the current aaii bull index level the chances of equities falling from here are very low they add amid recent nasdaq weakness one measure of internal strength is on the back foot again that said given that it is not far from its recent lows traders will be watching its behavior closely read more indeed the nasdaq new highnew low nhnl index which topped at 964 in january 2021 and had been diverging for eight months into the nasdaq composites november peak plunged to just 6 on january 28 late januarys 6 trough can be considered historically low and potentially washed out since the great financial crisis sub10 readings have ultimately been closely associated with major ixic lows with the composites subsequent rally off its latejanuary low the measure did improve to 222 on february 11 however amid renewed jitters over the past week or so the nhnl index has turned down again the measure ended thursday at 176 putting it just below its 10day moving average at 186 and since this measure does not have a tendency to flatline for long but instead form vbottoms and abrupt tops traders will be watching to see if it will establish a higherlow vs a nasdaq composite lowerlow as it did in early 2016 and early 2009 or if it will break the recent trough and fall closer to zero as it did in late 2011 and late 2018 in march 2020 the measure simply reversed higher off its 12 trough and did not look back for fridays live markets posts prior to 0900 est1400 gmt  click here read more terence gabriel is a reuters market analyst the views expressed are his own