European Sentiment Turning More Bearish; Hedge Fund Exposure Nears Two Yr Low

European equities took a hit after last week’s ECB meeting, but sentiment has been turning more bearish for the last few months and Morgan Stanley’s market timing index (MTI) based on a collection of sentiment metrics is now at the lowest level in two years and fully in Buy territory. “Price action suggests that markets appear to be experiencing a growth/deflation scare at this time even though economic surprise indices are not breaking down and US 2Y yields remain resilient,” write Morgan Stanley analysts Matthew Garman and Krupa Patel. “We believe that the growth outlook isn’t as bad as feared……