Merrill: Investors bullish in July
Strong economic reports quell investor gloom, outlook still remains cautious, Merrill Lynch says.
July 19, 2005: 12:30 PM EDT
LONDON (Reuters) - A stream of positive U.S. economic data washed away the worst of investor gloom in July, raising the outlook for global growth and profits but also buoying U.S. interest rate expectations, Merrill Lynch said Tuesday.
The investment bank said a monthly poll of 273 fund managers worldwide indicated a more upbeat tone following a flow of strong U.S. reports showing benign producer price increases, robust retail sales and a solid housing market.
"You are seeing people more confident about the global macro outlook," said David Bowers, Merrill's chief strategist. "Even the bulls have been taken aback by the strength of the U.S. numbers."
Investors remained cautious about the outlook, however, keeping cash levels high and worrying about monetary policy, he said. A plurality also still expect growth to weaken over the next year.
But the poll showed 38 percent of respondents expecting the global economy to be stronger over 12 months, compared with 23 percent who felt this way in both June and May.
By contrast, 43 percent expected weaker growth, but this was down from 57 percent in June and 56 percent in May.
The more bullish tone spread into corporate earnings expectations with investors now seeing 5.1 percent global earnings-per-share growth over the next year compared with 4.5 percent in the June poll.
Belief that the U.S. economy may be growing faster fed into rate expectations with respondents seeing an average 3.8 to 3.9 percent when asked what neutral U.S. interest rates -- neither accomodative nor restrictive -- would be.
That would sit with a common view expressed separately by investors that the Federal Reserve will tighten by 25 basis points two or three time more before pausing in its cycle.
Assets
Not surprisingly given the more bullish tone of the survey, respondents indicated little change in their asset allocations, which generally have favored equities heavily over bonds.
The average weighting of stocks in mixed asset portfolios was 54 percent, roughly where it has been since April.
Meanwhile, 58 percent of respondents said they were overweight equities, again little unchanged.
Bonds remain very much out of favor despite continuing returns that have surprised many investors.
Only 7 percent of respondents were overweight bonds compared with 66 percent who were underweight.
Some 37 percent were overweight in cash compared with 34 percent a month earlier.
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Mais um ponto pela bela noticia Bullish que ajuda a sustentar a minha ideia de que este Bull está para durar até ao fim desta década.
Acho que percebi que a taxa de juro se prepara para subir o que é uma boa noticia Bull.
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