Welcome to the turnaround Tuesday, though there s little turn at play considering Monday was the fourth consecutive day of gains for both the S&P 500 SPX, and Nasdaq Composite COMP, while Wall Street stocks continue to climb in this quarter, the mood darkens among global fund managers. So says the latest survey from Bank of America, which reports those managers have turned negative on global growth expectations for the first time since early COVID day - 19 pandemic days — April 2020.
The chief reasons are inflation worries and slowing China growth that have led to an exodus out of bonds and into cash, where levels leapt to a 12 months high. The survey was the least bullish since October 2020.
Our call of the day takes a look at where your managers are putting money. One major difference between this month and last was the big cash move and the sizable move out of bonds. Global bond allocation, in fact, was a net-80% after the lowest ever hike, as inflation fears continue to push up interest rate increase expectations.
Money is still being invested in stocks, which jars a bit when one considers negative economic impacts to global economy.
Since the early days of the pandemic in the economy, fund managers haven t been this pessimistic on the economy since the early days of the crisis.
Long on those assets exposed to inflation and short on those that could suffer from a Fed taper of its stimulus efforts.
In the latest month, energy, cash, banks and commodities were behind and a medical, bond and staples were kicked to the curb.
Global profit expectations have turned negative, to the lowest level since May 2020, and corporate profit margins are expected to continue deteriorating — a net 51% of managers expecting that to happen. That means overweight commodities and banks, underweight bonds, emerging markets and utilities — perceived as vulnerable to interest rate hikes, said Bank of America.
Here are two more meaningful chart from the survey, showing. 38% of investors believe inflation is permanent and 69% see it as transitory ; however, the gap is narrowing.
What is happening to oil, which shows things a bit neck and neck as to whether crude will hit $100 a barrel this year as Bank of America believes will happen.
The expectations for higher oil aren t hurting the energy sector as the money flows in, though some say beware on this bet.
Healthcare giant Johnson Johnson JNJ reported an earnings beat, with United Airlines UAL still to come and streaming entertainment service Netflix NFLX, after the bell. Tesla TSLA, earnings are coming immediately following Wednesday s close.
Google will unveil Alphabet s GOOGL on Tuesday on new Pixel phones.
The China tech group Alibaba BABA, has developed its own processor via the T-Head chip unit to power its data centers servers.
Invesco, which seemed days away from bringing its exchange-traded fund to market, has removed such plans from sales. ProShares, meanwhile, is expected to list its own ETF on Tuesday along with Valkyrie, which gets witty with its own ticker BTFD. Bitcoin BTCUSD, itself is held at around 62,000, keeping fresh highs at bay.
Building permits and housing starts for September are due ahead of the market opens.
Stock futures YM 00, ES 00, NQ 00, are moving up as bond yields TMUBMUSD 10 y, cool slightly. Watch rising copper prices HG 00, as a supply squeeze has been pushing up prices. Crude oil CL 00 is also higher, along with gold GC 00, as the dollar DXY is falling.
That dollar weakness has prompted a warning from Saxo Bank s chief investment officer, Steen Jakobsen. A more significant U.S. dollar breakdown could accelerate volatility in the FX market and see commodities prices ripping further as commodity markets and the U.S. dollar are often co-dependent in major market moves, as was the case in the massive run-up in commodities prices in 2002 - 08, Jakobsen told clients in a note on Tuesday.
Read: Coal-fired power forecast to rise for first time in seven years in the U.S.
UBS have rolled out their weekly list of the most beloved and not-so-loving stocks. The top five overweights are Visa V, Facebook FB, Microsoft MSFT, Alphabet GOOGL and UnitedHealth UNH. The top five underweights are Apple AAPL, Taiwan Semiconductor TSM, Tesla, Alibaba and Nestl NSRGY. In India's flooded south a couple raced to their wedding in a giant cooking pot.
Lee Jung-jae, the star of Netflix's hit Squid Game, says that he is really awful at games.
The emailed version will be sent out around 7: 30 a.m. Eastern.