By Vicki Schmelzer
NEW YORK (MaceNews) – Global investor sentiment improved markedly in November, as world recession fears abated and “global growth optimism” surged, according to the findings of the latest Bank of America Merrill Lynch monthly fund managers’ survey, released Tuesday.
“The bulls are back,” the survey said, adding that the “fear of missing out” prompted a beeline into equities this month.
Average cash balances fell to 4.2% in November from 5.0% in October and compared to 4.7% in September. This was the biggest monthly decline in cash holdings since the November 2016 Trump election. Cash levels currently are at the lowest level since June 2013, the survey said.
Allocation to cash stood at a net 18% overweight this month, versus a net 38% overweight in October and a net 39% overweight in September. This compared to a net 44% overweight in February, which was the highest overweight since January 2009.
Current cash allocation is the lowest since November 2015, when allocation was at 16%, and is below the long-term average of 21%, BOA Merrill Lynch said.
This month, in a wild flip-flop, a net 6% of portfolio managers looked for global growth to strengthen in the coming year. In October, a net 37% of portfolio managers looked for global growth to weaken and in September, a net 28% had that view.
In January 2019, a net 60% of those polled had a bearish global growth outlook, which was the worst outlook for the world economy since July 2008.
Inflation expectations surged in November, with a net 31% of managers looking for inflation to rise in the next 12 months. In October and September, a net 4% and a net 11% of managers respectively saw global CPI rising in the coming year.
The most recent trough for rising inflation expectations was the net 1% seen in July, which was the most bearish FMS inflation outlook since July 2012. The most recent peak for inflation expectations was a net 82%, seen in April 2018.
This month, global investors took their bias for stocks over bonds to the next level. In November, a net 21% of fund managers were overweight global equities, compared to a net 1% overweight in October and a net 4% underweight in September.
This compared to June 2019, a net 21% of fund managers were underweight global equities. June’s underweight was the lowest equity allocation since March 2009, when the S&P 500 hit a low of 666.79 in the wake of the financial crisis. As a point of comparison, a net 55% of managers were overweight global equities in January 2018, at the time a two-year high.
In November, a net 47% of portfolio managers said that they were underweight bonds, compared to a net 38% underweight in October and a net 36% underweight in September. August saw a net 22% underweight, which was the highest allocation to bonds since