Major 'FOMO' Trade Driving Rally - BofA/Merrill Lynch

A new BofA/Merrill Lynch global fund survey for November showed the bulls are back in town and there is a major "Fear of Missing Out" (FOMO) trade happening.

BofA/Merrill Lynch's Chief Investment Strategist, Michael Hartnett, said global recession concerns have vanished and FOMO has prompted a wave of optimism and a jump in exposure to equities and cyclicals.

While Hartnett said the easy part of the rally is over, the markets can still rally given that the firm's Bull & Bear Indicators suggest there is no "excess greed." Meanwhile, there is "excess liquidity" and corporate earnings are set to accelerate.

The biggest bullish surprise from the survey was that investors still say a "trade war" is the number 1 tail risk, while a "trade truce” can boost exposure to stocks/cyclicals further.

Meanwhile, the biggest bearish surprise is 84% say the Fed won’t raise rates before the 2020 US election so a hawkish Fed could unwind stubborn long positions in US tech/growth & Treasuries.

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