It’s a Goldilocks Economy Merrill Survey Finds

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Stock Market Bears

Editor: Philip Ragner | Tactical Investor

Merrill Survey: It’s a Goldilocks Economy

swath of professional investors believe we’re in a “Goldilocks” economy, according to the most recent Bank of America Merrill Lynch fund manager survey.

As of early May, 34% of investors saw the economy as having above-trend growth and below-trend inflation, ThinkAdvisor notes. That’s a record high for the survey, whose other choices were “boom,” “stagflation,” and “secular stagnation.”

Merrill chief investment strategist Michael Hartnett said in a statement that “irrationality is not yet visible despite all-time highs in credit and equity markets, robust global EPS and a benign French election result.”

The survey of 213 investors managing $645 billion revealed that Chinese credit tightening is now the most widely perceived tail risk, displacing the dissolution of the European Union.

Nineteen percent of investors are concerned about a crash in global bond markets, and 16% worry about a trade war. The survey also provides insight into how investors are trading. The most popular trade in early May was long Nasdaq, and the second most popular was long European equities, ThinkAdvisor writes. Full Story

Stock Market Bears state you should fear stock Market crashes; Do not listen to this Rubbish 

After a decade that saw a recession lead into historically low growth, a large swath of investors believes conditions globally are now just about right.

Some 34 percent of market professionals responding to this month’s Bank of America Merrill Lynch Fund Manager Survey described the economy as fitting the “Goldilocks” standard of “high growth and low inflation.”

That’s the highest ever for the survey, which draws from 213 panelists with $645 billion in assets under management.

The reading comes at a critical time as investors have been anticipating faster growth ahead that has yet to show up in most of the actual data readings. Global GDP growth likely was 3.4 percent in 2016 and is expected to pick up to 3.6 percent this year, according to International Monetary Fund estimates.

A Goldilocks economy is particularly important for investors as it implies conditions in which growth persists but not at a pace that requires central banks to tighten financial conditions at a policy faster than markets anticipate.

Still, characterizing growth as “high,” as put in the BofAML report, seems a stretch so far, at least in the U.S. The first quarter saw GDP rise just 0.7 percent, and headwinds persist. Full Story


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