Wednesday, October 21, 2009

BofA Merrill Lynch Fund Manager Survey Finds Risk Appetite at Highest Point Since April 2006

With almost all asset classes ( Dow 10.100, S&P 500 1100, N100 1780, Dax 5860, FTSE 5250, Oil $ 80 etc ) at new highs it looks like the herd mentality is once more rampant ( fueled in large part from the $ Carry Trade - €/$ 1,50 - & "Quantitive Easing" see also Speaking Of A Money Illusion........ ). Nice to see that after one of the biggest rallies in decades finally the "smart money" ( unlike the retail investor ) is getting more bullish..... As a contrarian it seems lots of folks are "all in"...... Another UPDATE: It remains to be seen if last hour drop from Wednesday was only a minor glitch in the Matrix..... Very telling that this (!!) "bulletproof" strategy seems the only relevant parameter that is important.... until it stops working ....;-) UPDATE: Taking todays ( Oct. 26th ) action into account i think this was more than a minor glitch in the MATRIX... There is now a reasonable chance that this guy will get the upper hand for some time to come..... At least all the "Cash On The Sidelines" ( sarcasm ) has now the opportunity to step in. Add to this that "Wall Street Finest" have only a sell rating on 5 percent of all stocks and the potential for some extra SCHADENFREUDE is not getting smaller.... ;-)

Da gerade heute praktisch alle Vermögenswerte nahe Ihren Jahreshochs ( Dow 10.100, S&P 500 1100, DAX 5860, MDAX 7450, TECDAX 775, FTSE 5250, Öl $ 80 ) notieren ( dank des$ Carry Trades invers zum $ - €/$ 1,50 - versteht sich, sowie dank des sog. "Quantitive Easing" , passend zum Thema Speaking Of A Money Illusion........ ) sieht es in der Tat einmal mehr so aus als wenn der Herdentrieb praktisch alle Marktteilnehmer infiziert hat... Da paßt es gut ins Bild das auch gerade jetzt die Big Boys ( ganz im Gegensatz zu dem Kleinanleger ) nach einer der größten Kursexplosion der letzten Jahrzehnte endlich Ihre Vorsicht über Bord geworfen haben und zum Teil massiv Ihr Risiprofil erhöht haben... Man könnte auch sagen das sie "all in" sind... Erneutes Update: Es bleibt abzuwarten ob der starke Abverkauf in der letzten Handelsstunde vom Dienstag nur ein kleiner Fehler in der Matrix gewesen ist... Wenn man sich aber die anscheinend momentan gängige "Strategie" (!!) ansieht wie die Märkte "funktionieren" sagt das einiges über Robustheit der Rally aus......;-) UPDATE: Nach dem heutigen ( 26. Oktober ) erneuten Abverkauf handelt es sich wohl um mehr als nur einen kleinen Fehler in der Matrix..... Es ist nun nicht unrealistisch das dieser Typ bis auf weiteres die Oberhand gewonnen hat ...... Immerhin ermöglicht dieser noch kleine Rückschlag ja den angeblichem "Cash On The Sidelines" ;- ) sich endlich massivst in den Aktienmarkt einzukaufen.....Wenn man jetzt noch bedenkt das die "Analysten" lediglich 5% der Aktien mit einer Verkaufsempfehlung versehen haben dürfte das die mögliche Schadenfreude nicht gerade mindern..... ;-)


H/T RobotTrader

BofA Merrill Lynch Fund Manager Survey Finds Risk Appetite at Highest Point Since April 2006 as Double-Dip Recession Fears Fade Marketwatch

--Investors See Brighter Corporate Profits on Horizon - Shift from Cash to Equities

Investors' risk appetite has reached its highest point in more than three years amid continued optimism about the prospects for a global economic recovery and rising corporate profits, according to the BofA Merrill Lynch Survey of Fund Managers for October


Investors are increasingly confident that the threat of a double-dip recession is waning. A net 65 percent of respondents believe a global recession is unlikely in the next 12 months, up from 47 percent a month earlier.

A net 72 percent of respondents believe the outlook for corporate profits will improve in the next year, up from 68 percent a month earlier.
The survey also shows asset allocators shifting out of cash and into equities as risk appetite grows. Their cash positions are at their lowest level since January 2004. A net 7 percent of respondents are underweight cash in October, compared to a net 10 percent overweight a month earlier.
A net 38 percent of panelists are overweight equities, up from 27 percent in September. Technology, Energy, Materials and Industrials are the favored sectors for asset allocators in October with investors still shying away from financial
stocks.
Investors seeing value in Europe hits eight-year high

Asset allocators are showing a growing conviction that global corporate profits will post double digit earnings growth, the survey shows. A net 39 percent of panelists think profits will rise by at least 10 percent in the next 12 months, up from just 25 percent in September.

Optimism about Europe is pronounced in the October survey. A net 30 percent of global portfolio managers see eurozone equities as undervalued relative to other regions, the highest reading since April 2001
. A net 9 percent of panelists want to overweight the region in the next 12 months, up from 7 percent last month. This contrasts with Japan, which a net 20 percent of investors regard as the least attractive region a year ahead.

The change in sentiment coincides with a shift in investors' appetite for European financials. Investors are overweight European banks for the first time since June 2007, courtesy of greater confidence in bank balance sheets and profitability trends.

"Europe is emerging phoenix-like from the ashes as confidence in its banks boosts overall confidence in European equities," said Gary Baker, head of European equity strategy at BofA Merrill Lynch Global Research.
> Read this twice...... ;-)
> Das sollte man zur Sicherheit zweimal lesen....... ;-)
Chinese confidence rebounds: U.S. dollar confidence sinks

Confidence in the prospects for the Chinese economy and emerging markets in general remains robust. A net 49 percent of respondents think China's economy will strengthen in the next 12 months, up from 35 percent in September. A net 36 percent of respondents also said they would most like to overweight emerging markets in the next year.

Continuing weakness in the U.S. dollar has resulted in a growing number of respondents who believe the dollar is undervalued. A net 20 percent of panelists regard the currency as undervalued, compared to one percent a month earlier. Japan's economic outlook is marked by a growing number of asset allocators who view the yen as overvalued. A net 34 percent of respondents believe it is overvalued, compared to just 21 percent last month.

"Confidence in Chinese growth has rebounded but worries over a U.S. dollar crisis are on the rise. The dollar is seen as undervalued and the yen as very overvalued, suggesting that central bank intervention in currency markets in coming months could soon prove successful," said Michael Hartnett.

A total of 229 fund managers, managing a total of US$616 billion, participated in the global survey from 2 October to 8 October. A total of 195 managers, managing US$384 billion, participated in the regional surveys.

> It feels like my blog headline "Bubbles Are Normal And Non-Bubble Times Are Depressions...." is the new mantra among central banksters...... ;-)

> Ich fürchte immer mehr das meine Blogüberschrift "Bubbles Are Normal And Non-Bubble Times Are Depressions...." weltweit alle Zentralbankster erfaßt hat....... ;-)

UPDATE:

90% Of Fund Managers Think The Market Will Go Up Clusterstock

Maybe the street has become a bit too bullish afterall.

90% of institutional investors believe that the S&P500 will rise to 1,200 by the end 2011 according to a survey by The Markets. 75% then expect it to hit 1,500 by the end of 2013, and 75% believe that the market already bottomed earlier this year. The survey covered 103 invesors in 20 countries.

We don't necessarily disagree with these views, but naturally find it disturbing to find such a strong consensus on market direction. It sets off our contrarian alarm loud and clear.

The Markets

From Paul Tudor Jones, who reports in his third-quarter letter to investors

While many of our surveys of aggregate hedge fund positioning would say net long exposure has rebounded to late 2007 percentages (though on a smaller base), and mutual fund cash/asset ratios have come in significantly, markets continue to trade as if most are not satisfied with their current commitment to equities.

Fall 2009 Big Money Poll Results Out: Only 13% Are Bearish, 70% Are Beating S&P, As Taxpayers Get Hosed ZH

On economic matters, 72% of respondents believe the recession has ended, and an amusing 52% believe there is no chance of a double dip recession. It is scary that over half of the "sophisticiated community" thinks that Fed can succeed where so many central planning administration have failed before.

Uh-Oh: Economists Say Recovery, Market Gains Solid BR

Nearly four of five economists surveyed by USA TODAY say the stock market rally since March is heralding a sustainable recovery.

> Needless to say that i agree almost 100 percent with this guy & Geremy Grantham....

> Kann nicht oft genug wiederholen das ich zu fast 100% mit diesem Typen & Geremy Grantham übereinstimme.....


JGLetter_ALL_3Q09 -

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10 Comments:

Blogger jmf said...

Amen.

Kass: The Earnings Season Racket


While it has been widely advertised by chest-thumping bulls in the media that at least two-thirds of the companies that have reported third-quarter earnings have beaten forecasts, there was less than meets the eye to third-quarter profits as in many cases the "beats" were on lowered estimates. What is often being ignored is how orchestrated earnings season has become, not only that the beats are from lowered and depressed guidance but that, in many cases, there have been high-profile forward-quarter guide downs.
The reality is that companies almost always beat consensus earnings forecasts, even during rough economic periods. Investor relations departments and Wall Street analysts are very good at getting numbers down to the right level before reports are released. As a result, the actual results vis-a-vis expectations or consensus do not vary materially from historical experiences, in good times and even in bad times.
Indeed, the concept of beating is one of the single-most overhyped statistics extant given the degree to which estimates move around prior to reports.

On Tuesday, according to a friend who compiles this stuff, 49 companies reported earnings and provided guidance. As seen in the lists below -- 28 were better, 21 worse -- a surprisingly large 43% of reporting companies either missed estimates or cut guidance or both.

Take these 49 reports and add to Monday's previously reported EPS results, in which 12 releases were better and 19 worse, and exactly half of the 80 companies that have reported third quarter 2009 and are guiding for fourth quarter 2009 have either missed the third quarter or are cutting the fourth quarter

1:42 AM  
Blogger jmf said...

More an the smart ( no sarcasm! )retail investor via Rosenberg

Equity funds, meanwhile, have suffered over $4 billion net outflows in each of the past two weeks as retail investors, instead of being lured into “averaging in”, are instead taking profits on an opportunity provided by this 60% rally that few ever thought was going to be possible six-months ago. The memory of the misery in March lives on!

5:32 AM  
Blogger jmf said...

Nice video from one of the most realistic people on Wall Street


Art Cashin on Stocks and the Economy
Expected Returns

9:54 AM  
Blogger jmf said...

Another bear capitulating......

Richard Bernstein: Once a huge market bear, now a bull
via Credit Writedowns

Richard Bernstein has done a huge reversal in the last few months from touting low-risk stocks to high-beta ones. He has gone from a preference for consumer staples to one for consumer cyclicals (XLY). And he has gone from lugubrious doubter of a sustainable recovery to an almost V-shaped optimism.

6:33 AM  
Blogger jmf said...

Carry Trade Heatmap.....

Goldman Launches Global Heat Mapping Tool To Serve Its Trigger Happy, ADHD Addled, Red Bull Chugging Clients
Zero Hedge

Domestic markets seem just a little too claustrophobic recently? The S&P's inability to breach 1,100 got you down? Trading in After Hours not the cash cow it used to be? The fix for gunning stocks ever higher 24 hours a day becoming irresistible? No clue what do with yourself in the hours between 4pm and 9:30 am? Have no fear, Goldman is here. All Goldman clients now have full access to a brand spanking news global heatmapping feature. US looking red, check out China (kinda green). China not doing it for you: Turkey, South Africa and New Zealand seem like a great place to stash cash for the next 10 minutes before the "urge" raises it ugly head.....

One commentator sums it up.....

"i'm actually surprised they don't have the moon on this map."

:-)!

11:42 AM  
Blogger jmf said...

Deja Vu......


Netflix's Stock Buybacks: Money to Burn
WSJ

The DVD mail-order business bought back $130 million in stock in the third quarter, it disclosed Thursday, while generating only $25.5 million in free cash flow. So far for the year, the company has repurchased $245 million of stock compared with its $67 million of free cash flow.

In the process, Netflix's cash and investments roughly halved to $155 million. Netflix continued its stock repurchases this quarter and says it will borrow money to fund future buybacks.

Why? Netflix Chief Financial Officer Barry McCarthy said Thursday, "We think it's a good value, obviously." It isn't that obvious. Thursday, before an 11% rally Friday, the stock was trading at 27 times 2009 consensus earnings estimates.

11:02 PM  
Blogger jmf said...

You really cannot make this up.....

After present conditions in the consumer confidence survey hits a 26 year low Wall Street Finest offer their view.....

Analysts still confident even if US consumers aren’t
FT Alphaville

"The present situation/expectations differential supports the case for a legitimate economic recovery, despite the recent setback."

Breaking the report down by component type reveals that the present situation (20.7 from 23.0) remains well below future expectations (65.7 from 73.7) for the 12th consecutive month, reflecting a sustained trend shift supporting the case for a legitimate, albeit lagged, recovery.

"Although today’s report was consistent with the recent fall in the University of Michigan’s index of consumer sentiment, there seems no obvious explanation for the declines"

"Although today’s report was consistent with the recent fall in the University of Michigan’s index of consumer sentiment, there seems no obvious explanation for the declines."

Unfortunatley they are not kidding.....

1:49 AM  
Blogger jmf said...

I think Michael Pettis is spot on....


I spend a lot of time talking to large hedge funds and institutional investors – with at least three or four one-on-one meetings a week – on China and market conditions. It worries me that recently I have heard investors say many times, generally very sophisticated investors, that we are clearly in a bubble and the best strategy is to ride it out as long as we can. This has almost become one of the mantras of sophisticated investors – the less sophisticated, I guess, assuming that the crisis is safely behind us.

It worries me because of course we can’t all collectively ride the bubble and bail out before everyone else does. I wonder if this means that an awful lot of the big funds can be expected to rush to the doors at the same time when things turn bleak. If so, of course, that means we are likely to see both the upside and the downside market risks increase

5:18 AM  
Blogger jmf said...

No surprise..... I can hear margin calls....

Margin debt continued to increase in September - NYSE MW

Margin debt rose further in September, according to the New York Stock Exchange, continuing to rebound along with the equities market from the lowest levels in years early this year.

At the end of September, margin debt was up 6.8% from August to $220.79 billion, according to Big Board data for customers of NYSE-member securities firms. The figure got as low as $173.3 billion at the end of February, the smallest level since the end of 2003.

Market analysts track margin-debt activity as an indication of investors' appetite for speculative trading.

12:18 PM  
Anonymous Elizabeth Davis said...

If these commercial security alarmsare not safe and does not solve the problem then it becomes little tedious.Thus it is necessary that the right choice is made.

10:39 PM  

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