The significant divergence in the US stock market: a unanimous bearish outlook, yet no active repositioning, and market pricing shows no signs of panic

As of the end of the first quarter of this year, a survey shows that the CEO Confidence Index in the United States has dropped to 4.99, with a full score of 10, marking the lowest level since the 2008 financial crisis. This means that this low level of confidence is not only below that during the lockdown period of the COVID-19 pandemic but also lower than during the interest rate hike cycle caused by high inflation, highlighting the extreme uncertainty and concern among corporate executives regarding the future economic and policy environment. The financial blog Zerohedge points out that one situation in the current market is that while everyone expects the apocalypse, in reality, no one is trading that way. In other words, although people are complaining about Trump's policies, actual investors do not seem to be actively shifting their positions. Therefore, the current actual stock position allocation (red line) and market sentiment (gray line) have formed a significant divergence. On Wednesday, Goldman Sachs senior trader Brian Garrett expressed a similar view, noting: Currently, both bullish sentiment towards the stock market and consumer confidence and CEO sentiment are quite low, entering a bear market. On the other hand, the actual pricing in the market does not show signs of panic. For example, the implied volatility of the one-year benchmark S&P 500 index SPX is in a moderate range, and a put option with a 90% strike price only requires a 3% premium, indicating that investors are not significantly hedging against the risk of a sharp market decline. Garrett concluded, “In my 18 years of trading, it is rare to see the market's dialogue so pessimistic, yet at the same time, the VIX is below 25. And I have never seen something that everyone agrees on actually come to fruition (although this is just a personal observation).” The Wall Street Journal mentioned that on the eve of the tariff storm, Wall Street is unanimously bearish, expecting a sell-off in U.S. stocks to escalate, with volatility comparable to that of the U.S. elections. Analysts at Bank of America expect the S&P 500 index to potentially fall below 5,500 points; a recent report from UBS stated that if the White House implements a 20% tariff, the index could drop to 5,400 points; even the three most optimistic bulls on Wall Street have admitted that their predictions for the index this year are overly optimistic