Bulls don’t really like it when Everyone is bullish. It all boils down to the herd mentality and looking for key contrarian indicators. If this holds true, then the bulls better be worried about how bullish everyone is. Bank of America Corporation (NYSE: BAC) released its BofA Merrill Lynch Fund Manager Survey for February this morning and the Bullish Sentiment is now running at record high.
Record Highs? Ouch. The report said that 67% of asset allocators are now overweight in global equities. That is the highest since it started taking the survey back in April 2001. This reading was 55 in January and 40 in December. Bond allocations have continued to fall with 66% of asset allocators now underweight in bonds. The underweight bonds was 54 just a month earlier. The discrepancy between stock and bond allocations is also at the highest reading ever.
It is the same extreme, in the other direction, for global markets. Only a net 5% of fund managers are now overweight global emerging markets equities. That was 43% in January, making the drop the largest decline in emerging markets ever.
A net 70% now see the Federal Reserve raising rates in the next year. That was just 62% a month earlier. Some 86% of fund managers see short-term interest rates being higher in 12 months, and 75% see global inflation picking up.
Commodities aren’t dead yet…. 28% of asset allocators are now overweight in commodities from a reading of 16% just in January.
The group is not a massive group by any account, but it is a rather important group. Bank of America Merrill Lynch said that 188 fund managers who manage $569 billion in assets gave the survey from February 4 to February 10.
We recently gave a take on the greatest bull markets going all the way back to 1900 to look for the “WHEN” component of when it was time to bail on a market. Based upon our own methodology of using consensus data differently, we came up with 13,042 for a 2011 DJIA target.
More detail with regional and sector data can be found here in the full BofA report.
JON C. OGG
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