Market Focus: Panics in Pictures

Our global risk appetite index fell to -3.01 today, entering the "panic" zone for the first time in over 5 years. The broad pattern of the long risk appetite upswing since October 2002 continues to track the long cycle of 1982-87- exhibit 1. Taking the pattern literally would suggest that it will take another 2 months before risk appetite hits a trough, though only at a slightly lower level. That was not, however, the most typical panic episode, coming as it did just after the 1987 equity crash. In fact, most global equity markets had troughed before risk appetite entered the panic zone.