“It’s a bull market” and this is “no longer a recession”.
That’s the “September zeitgeist” as revealed by the latest edition of BofA’s Global Fund Manager survey, out Tuesday.
The net 58% of respondents who said we’re currently in a bull market compares to just 25% in May, when the likes of Stan Druckenmiller were busy making declarations like this one: “The risk-reward for equity is maybe as bad as I’ve seen it in my career”.
To be sure, you could scarcely blame Druckenmiller, who was hardly alone among “brand name” investors in doubting the rally. His skepticism (and subsequent frustration) was echoed by a veritable who’s who of the financial pantheon.
Paul Tudor Jones said he was eating “humble pie“, Warren Buffett was gun-shy after incurring a mind-boggling $50 billion paper loss during the first quarter, and Howard Marks had a difficult time discerning what the future might hold in an environment characterized by unprecedented coordination between fiscal and monetary policy.
Now, here we are, six months on from the March panic, and investors are marking to market, as it were.
“For the first time since February more investors (49%) say [the] global economy is in early-cycle phase vs recession (37%)”, BofA’s Michael Hartnett writes, in the color accompanying the survey results.
That, Hartnett says, is “a key recovery milestone”.
Further evidence of a shift in investor thinking comes from responses to a question about the likely trajectory of the global economy over the next year, as well as sentiment around earnings.
“A net 47% of investors believe global corporate earnings will rise 10% or more over the next 12 months”, Hartnett notes. That’s the highest since February of 2011.
And yet, opinions on the likely shape of the recovery suggest “it’s not escape velocity”.
61% still see a U- or W-shaped recovery, while only 20% were willing to commit to the V-shaped narrative, up from 17% in August.
Of course, what’s actually panning out “on the ground” (so to speak) is a “K-shaped” recovery, which Bloomberg helpfully defines as a “wildly uneven” conjuncture, in which “more than 13 million Americans are unemployed [while] many others have been able to work from home and some are actually richer thanks to a surging stock market and housing boom”.