What Fund Managers Are Thinking About And Fearing Right Now

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EU sovereign debt fears and premature fiscal tightening top the concerns of hedge fund managers, who wax increasingly bearish on the economy.That’s what Bank of America found in a recent survey of 244 panelists with $784 million in assets managed.

More respondents than last month also believe that QE3 could be take place, with only 22% ruling out the possibility in comparison to 40% in July.

This logic would seem to stand in contrast to sentiment in Washington right now, where politicians have focused on tightening spending and the Fed appears increasingly conflicted about whether to raise interest rates.

More important points from the survey:

– A majority of managers are bearish towards economic growth, a change from last month when a net 19% harbored a positive global GDP outlook.

– A net 30% of managers think corporate profits will decline in the next 12 months, compared to a net 11% who thought corporate profits would improve last month. That’s the sharpest drop in survey history.

– 40% of respondents think inflation will decline in the next 12 months, in comparison to 58% who thought it would rise last month.

– Cash balances rose from 4.1% to 5.2% over the last month.

– Asset managers have cut their stance on commodities, with only a net 5% overweight compared to a net 13% last month.

– Bank of America recorded the sharpest fall ever in managers’ standings on global equity markets, with a majority of managers now slightly underweight on equity holdings.

– Shockingly, managers are less concerned about EU equities markets than they were a month ago, but still bearish on the whole.

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