BofA/ML Survey Shows Fund Managers Less Bearish
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The Bank of America Merrill Lynch Fund Manager Survey said Tuesday that the bearish sentiment among investors in June and July has receded, but the consensus shows an overall cautious stance for global growth and risk.
Gary Baker, analyst for BofA Merrill Lynch said that the collapse of growth expectation in June and July has been followed by a period of stabilization in August, but just 5 percent of investors are predicting a period of stronger global growth in the next 12 months.
Baker added that the survey showed 78 percent of investors do not see another recession on the way.
Baker wrote: "Investor views stabilized after the sharp falls in growth optimism a profit outlook seen since the highs in May. It is a case of normalization as usual but still with a cautious undercurrent as investors seem to be in a “show me the data” frame of mind, trying to sort through sharply contrasting recent figures from the U.S. and Europe."
The survey report also added that the through all of the volatility this year, the one thing that remained was a constant pushing back of when the Federal Reserve will take the step to raise rates for the first time post recession.
"As quickly as we introduce a new option into the survey so the consensus shifts to the furthermost time point,” Baker wrote.
The survey showed that investors fear a premature fiscal tightening above all tail risks moving forward, followed by municipal default in the U.S. and European Union sovereign debt funding.
Inflation expectations rose in August slightly after a deflationary scare in July, while the risk appetite among investors rose to just below the long term average in August after dipping in July.
Gary Baker, analyst for BofA Merrill Lynch said that the collapse of growth expectation in June and July has been followed by a period of stabilization in August, but just 5 percent of investors are predicting a period of stronger global growth in the next 12 months.
Baker added that the survey showed 78 percent of investors do not see another recession on the way.
Baker wrote: "Investor views stabilized after the sharp falls in growth optimism a profit outlook seen since the highs in May. It is a case of normalization as usual but still with a cautious undercurrent as investors seem to be in a “show me the data” frame of mind, trying to sort through sharply contrasting recent figures from the U.S. and Europe."
The survey report also added that the through all of the volatility this year, the one thing that remained was a constant pushing back of when the Federal Reserve will take the step to raise rates for the first time post recession.
"As quickly as we introduce a new option into the survey so the consensus shifts to the furthermost time point,” Baker wrote.
The survey showed that investors fear a premature fiscal tightening above all tail risks moving forward, followed by municipal default in the U.S. and European Union sovereign debt funding.
Inflation expectations rose in August slightly after a deflationary scare in July, while the risk appetite among investors rose to just below the long term average in August after dipping in July.
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