“Economic challenges abound, and equities will rally climbing the ‘wall of worry'”— Paul Ebeling
The closely-watched monthly fund manager survey from Bank of America-Merrill Lynch indicate positive sentiment.
But some analysts surveyed are Bearish: their cash positions are the highest in a yr, as global economic growth expectations went South for the 1st time since April 2020.
At the same time, they are still holding stocks, with a 50% weighting. The overwhelming threat, as well as motivation, appears to be inflation, with 48% citing it as their Top risk. It is also informing investment decisions, driving fund managers into banks and out of utilities, a classic trade when interest rates are seen rising.
We are not overly concerned about inflation or the looming property-debt crisis in China bleeding outside the Mainland.
In the meantime, stocks have consolidated and legged up, with the S&P 500 rising near its all-time closing high. The benchmark has risen 20% YTD.
Have a prosperous day, Keep the Faith!