Two-thirds of professional investors doubt that the jump in the stock market since the lows of March is the beginning of a new bullish trend, it follows from the results of a survey of Fund Manager Bank of America in may.
At the background of the rise that led to the growth of the S&P 500 by 32% since the failure of the March 23, about 68% of respondents cited existing movement "bear market". The term implies that, despite the fact that the increase exceeded the 20-percent benchmark that would signal a new bull market, the fundamentals tell a more pessimistic story. Survey Bank of America is one of the most popular investors on wall street.
Investors are rethinking the strategy, after the longest bull market in history cut off abruptly after the peak in late February. The fall on wall street in the next month became the fastest slide on the territory of a bear market, as the global economic downturn prompted investors to sell everything and prepare for the worst.
Since then, the fed and other Central banks began to cash infusion, they were joined by the U.S. Congress, which has already allocated almost $ 3 trillion to Finance the program of economic salvation. The stock was up even more, despite the fact that, uncertainty remains regarding the development of the situation with the spread of the virus and its impact on future growth.
The respondents believe that the biggest catalyst for V-shaped recovery will become a vaccine; conversely, they see that the greatest risk may be the second wave of the pandemic, which will come in the fall.
Investors view value stocks as the worst bet in the current environment. 23% of this group expect to outperform their counterparts on the growth, the lowest level since December 2007.
The sectoral rates are now in favour of defensive assets, such as health, cash and bonds, and against investment in more cyclical nature, such as energy, equities in General and European assets. The level of cash is at the level of 5.7% in the portfolio, compared with a recent high of 5.9%, but still considered elevated.
The views on what companies should do with their own funds, to reflect the changing market economy: 73% of respondents said that it is necessary to focus on improving balance sheets and debt repayment, while only 15% of the approved capital costs, and 7% said that the need to meet shareholders through stock buybacks and dividend payments.
Managers also see significant shifts in the corporate segment. In their opinion, the most likely "structural shift," amounting to 68%, the concentration on the production of goods closer to home, followed by trade protectionism (44%), higher taxes (42%) and use of modern monetary theory (24%), which suggests that public debt does not matter, if inflation will remain low, while government spending should be directed at programs aimed at reducing income inequality.
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Most investors don’t think this rally is for real, according to widely followed Wall Street survey (CNBC)
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