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Investor cash levels are 'consistent with recession': BofA
CNBC
by Jeff Cox
6/14/2016
Excerpt:
Fund managers' cash levels are at their highest in nearly 15 years amid worries over a British exit from the European Union and the possibility that global monetary policy is failing.
Portfolios are at 5.7 percent cash, the highest level since November 2001 and "consistent with recession," according to the latest Bank of America Merrill Lynch Global Fund Manager Survey. Allocation to equities hit a four-year low, though commodity allocation reached a 12-month high.
The rise in fear comes even though stock market prices continue to hold positive, and estimates are that the string of declines in corporate profits will end in the third quarter. The CBOE Volatility Index, a popular market fear gauge, is around its highest levels since early February.
Brexit was considered the biggest "tail" risk — an improbable but damaging event — for the market, followed by what BofAML terms "quantitative failure," or the misfiring of central bank policies, with China currency devaluation third. Fears over the unsettled U.S. political situation actually edged lower in June.
The good news: BofAML believes the high levels of cash actually could set up a buying opportunity once fears of the British exit from the EU, or Brexit, dissipate. Despite being a catalyst for market worry, two-thirds of the 174 global survey respondents believe the U.K. ultimately will decide to stay.
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View the complete article, including links, images and video, at:
http://www.cnbc.com/2016/06/14/inves...sion-bofa.html
CNBC
by Jeff Cox
6/14/2016
Excerpt:
Fund managers' cash levels are at their highest in nearly 15 years amid worries over a British exit from the European Union and the possibility that global monetary policy is failing.
Portfolios are at 5.7 percent cash, the highest level since November 2001 and "consistent with recession," according to the latest Bank of America Merrill Lynch Global Fund Manager Survey. Allocation to equities hit a four-year low, though commodity allocation reached a 12-month high.
The rise in fear comes even though stock market prices continue to hold positive, and estimates are that the string of declines in corporate profits will end in the third quarter. The CBOE Volatility Index, a popular market fear gauge, is around its highest levels since early February.
Brexit was considered the biggest "tail" risk — an improbable but damaging event — for the market, followed by what BofAML terms "quantitative failure," or the misfiring of central bank policies, with China currency devaluation third. Fears over the unsettled U.S. political situation actually edged lower in June.
The good news: BofAML believes the high levels of cash actually could set up a buying opportunity once fears of the British exit from the EU, or Brexit, dissipate. Despite being a catalyst for market worry, two-thirds of the 174 global survey respondents believe the U.K. ultimately will decide to stay.
.................................................
View the complete article, including links, images and video, at:
http://www.cnbc.com/2016/06/14/inves...sion-bofa.html