Investors are so bearish, it’s almost time to start buying stocks again, says Bank of America

He’s got the whole market in his hands.

Federal Reserve Chairman Jerome Powell has one big goal Friday – to reassure financial markets that they’re getting a September interest rate cut, and then some, and drown out Fed presidents making hawkish noises from the cheap seats.

Keeping us busy, the annual weekend Fed gathering in Jackson Hole, Wyoming boasts more Fed officials, central bankers from Israel to Belgium and finance luminaries, but markets only have eyes for Powell. And judging by premarket action, and global equities, they don’t expect a letdown.

His address may mark the last market sensitive event of what Bank of America Merrill Lynch refers to as “the summer of bonds” where bonds flew off the shelves as investors sought safety from the threat of global recession. The bank notes investors poured a record three-month $155 billion into bond funds, versus $98 billion that drained out in January 2019,

Our call of the day comes from the Bank of America strategists, whose Friday “Flow Show” highlights a contrarian signal telling investors to get ready to love stocks again.

Their key contrarian Bull & Bear Indicator sank to 2.4 in the latest week from 3.4. The gauge is used to determine if investors are too negative or positive about stocks, with zero the most bearish, and 10 the most bullish. The rule: 8 and over, sell stocks, 2 and under, buy.

If it looks familiar, the indicator fell to 2.5 in early June, almost triggering that green flag for stocks, but then all recession-fearing hell broke loose. Could it jump around again? Most definitely.

The market


YMU19, -0.56%,


ESU19, -0.54%

 and Nasdaq

NQU19, -0.76%

futures turned lower after China announced tariffs on $75 billion of U.S. goods, sapping anticipation for the 10 a.m. Eastern speech from Federal Reserve Chairman Jerome Powell.

Plus: ‘Minsky moment’: We’re entering an ideal environment for buying gold

Read: Boris Johnson hits EU wall — here’s what it means for Europe’s economy

Europe stocks

SXXP, -0.37%

also reversed course, while Asia stocks

XJO, +0.33%

 had a mostly higher session.

The buzz

Shares of software group

CRM, +0.58%

 are surging on forecast-beating results. HP

HPQ, -0.16%

 shares are down after the tech group announced a new CEO and weak results.

In a $5 billion shopping spree, software group VMware

VMW, +0.04%

 is buying corporate sibling Pivotal Software

PVTL, +0.22%

 and security-software group Carbon Black

CBLK, +7.69%


Shares of U.K. listed media group Entertainment One

ETO, +34.19%

 are soaring in London after toy maker Hasbro

HAS, -1.00%

 said it’s buying the firm which is based in Canada in a $4 billion deal.

OSTK, +8.31%

 founder CEO Patrick Byrne has resigned from the company, days after alluding to an affair with a Russian spy. But investors of the troubled internet retailer still have plenty of headaches left.

Read: Western Digital, Goodyear, Alcoa all may be vulnerable to activist share attacks

The possibility of tax cuts being announced before the U.S. presidential election next year are not off the table, says White House economic adviser Larry Kudlow.

Data on new home sales will hit at the same time as Powell’s speech.

The tweet

Brazil’s president Jair Bolsonaro, in a harsh global spotlight over devastating Amazon fires, tweeted back that Macron was being self serving. The climate and the global economy will top discussions at the weekend G7 meeting in Biarritz, France.

The quote

“If you don’t want to worry about character, elect a woman. Please. Thank you.” — That was NBC News correspondent Kasie Hunt in an appearance on “Meet the Press Daily,” as she said she’s tired of the “nonsense” streaming out of male candidates.

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