Qontigo’s ROOF Scores were created to quantify an investor’s risk appetite. Are they bullish, neutral, or bearish? ROOF is an acronym for Risk-On/Risk-OFF. We produce two variants of the ROOF Scores per market using our fundamental multi-factor risk models:
- The Style ROOF variant maps eight of our fundamental style factors.
- The Sector ROOF variant maps each of the eleven GICS (2018) sectors.
Additionally, both variants incorporate two additional metrics on the recent change in risk in the market. ROOF Scores are computed and available daily. For more information, please download our methodology documents for both the Style ROOF and the Sector ROOF.
We will be using the ROOF Score methodology in our market commentary, as well as including them in our quarterly insight webinars for discussions. Do reach out to your Qontigo representative if you would like more information on the ROOF Scores for your market.
August 03, 2020: Qontigo ROOFTM Score Highlights
Investor sentiment remains high on stimulus fumes, except in China where it has gradually slipped into negative territory this past week brought down by renewed fears of geopolitical tension with the US. The rest of the world is officially in a bullish recession with stock markets being supported by the association of Speculators Against the Removal of Covid-19 Applicable Stimulus Measures (S.A.R.C.A.S.M.). Declining volatility remains the only consistent driver of positive sentiment, and were this downtrend to reverse as we head into the business end of a US presidential election year, sentiment could quickly deteriorate, tipping the supply and demand balance back in favor of risk-aversion, making investors a lot more sensitive to negative news than they have been since April. Read More >
July 27, 2020: Qontigo ROOFTM Score Highlights
Investors seem still caught in a past-tense, future-perfect kind of mood having decided that they should not worry about all the facts, only those they can live with. The divergence between market performance and fundamentals is being blamed on some bad calculations: someone forgot to add, someone forgot to minus, someone forgot to carry the one. The second wave of new infections is threatening large swath of the global economy and raising the probability of second lockdowns, but like the mother of a drug dealer, or the neighbor of a serial killer, investors seem to be the last to know, preferring instead to focus on the stimulus packages this will invite. And so quantitative easing triumphs once more over the presumption of economic fragility. Read More >
July 20, 2020: Qontigo ROOFTM Score Highlights
Sentiment remains positive in all markets we track except Australia where it remains neutral. Rising levels of risk-tolerance are increasingly at odds with rising levels of new Covid-19 cases around the world; especially in countries where leaders treat history as interpretive and science as metaphorical. In the meantime, CEOs are warning investors that business is not back to normal and may take longer than previously thought to get there. The truth about the real impact of the pandemic on the economy and earnings will remain a well-kept secret that will come out like wisdom teeth, only when the time is right. Until then, Central Banks are making sure the playing field remains in favor of risk-tolerance and hinders any politically ill-advised attempts at risk-aversion. Read More >
July 13, 2020: Qontigo ROOFTM Score Highlights
Despite a worsening Covid-19 narrative and expectations for a dismal Q2 earnings season (the worst since Q4 2008), risk appetite, building on the rebound from the previous week, ended higher in all markets we track except China. Like modern-day Moses looking for the promised land, investors continue to chase markets higher believing there is a utopian normal only to be found on the other side of a stimulus package. They have invested so much in the hope for a V-shape recovery that they feel compelled to stay the course until the data confirms it – even if there is a growing chance it never will. Unlike in previous crisis when Central Banks intervened only to provide a floor for markets and sentiment, this time around, they seem to be providing a staircase. Read more >
July 6, 2020: Qontigo ROOFTM Score Highlights
As the world battles a second wave of infections, even bigger than the first, investor sentiment remains resiliently positive, helping markets rise for another week. ‘Sbit weird, innit? To be fair, sentiment is well off its highs of early May but has ricocheted against the neutral zone last week (for apparently no good reason) indicating that while investors have not yet become disgruntled by the coronavirus news, they are still some ways from being gruntled. Central Banks’ QE analgesic has worked its potent magic, helping investors ignore rising feelings of risk-aversion stirred by record cases of new infections. So, while we seem in remission for the time being, rising bearish sentiment has only been stored away, like genes for baldness, and are only talks of a lockdown away from revisiting markets. Read more >
June 29, 2020: Qontigo ROOFTM Score Highlights
Investor sentiment hovers above the neutral zone like buzzing flies over a dung heap for the third consecutive week. The decline in risk tolerance was halted by positive economic data for May from the reopening phase. Simultaneously, the rise in risk-aversion, started by an increasingly negative narrative around a second wave of Covid-19 cases, has also slowed. Fear of missing out (FOMO) means investors are looking for reasons not to buy instead of reasons to sell. The next few weeks will see positive backward-looking economic data continue to battle negative numbers on the Covid-19 front. The tipping point is likely to only be met when either talks of a second wave of lockdown measures is heard, or China makes good on its threat to pull-out of the Phase One trade deal. A wise man once said, the best time to build the roof is before the rain. The probability of a W-shape recovery instead of a V- or U-shape one, is increasing with every new case. Read More >