Market Sentiment: All 12 Houses are Bullish North-American Equities

The Quarterly survey made by HSBC shows that 100% of the surveyed fund managers are now bullish on the north american equities. So not only does this confirm that the earthquake and current correction didn't scare anyone, but it actually helped shift the bullishness from "developing asian economies" to the US (and maybe Canada).

Interestingly, they are all excited about the improving economic conditions. Do I dare to ask which ones? Employment? Tax revenue from income tax or sales tax? The housing market maybe?

Of course, this is yet another warning sign, contrarian indicator, that we are about to hit — if we haven't already — a major top in equity markets. One of generational proportions.

March 15 (Bloomberg) The world’s largest fund managers are shifting away from Asian stocks in the first quarter over inflation concerns in favor of North American equities on an improving economic outlook, said a HSBC Holdings Plc (HSBA) survey.

Half of the fund managers have a positive outlook on non- Japan Asian stocks, down from 75 percent in the fourth quarter, according to the quarterly survey. All of the 12 houses, which manage a total of $3.98 trillion of assets, or 16 percent of global funds under management, are bullish about North American equities, up from 25 percent in the fourth quarter.

Investors had added capital to funds investing in Asia- Pacific stocks outside of Japan from the first quarter of 2009 until the third quarter of 2010, according to HSBC data. Yet such funds have seen outflows since the fourth quarter as frequent central bank actions heightened concerns about imported inflation and rising interest rates, said Bruno Lee, HSBC’s Hong Kong-based Asia-Pacific head of wealth management.

“Fund managers are looking to North American equities because of improving economic conditions, merger and acquisition activities and encouraging company reports,” Lee added. “Fund managers are lukewarm on Asia-Pacific ex-Japan due to concerns over rising inflation in the region and less bullish on Greater China equities as the market takes in the impact of ongoing austerity measures to contain inflation.”

Here's yet another bullish report on equities (HT to my friend SS who sent me the link).

March 17 (Bloomberg) The Standard & Poor’s 500 Index will fall to 1,232 by March 31, marking the bottom of a “modest correction,” according to Birinyi Associates Inc., which cited data measuring average drops of at least 5 percent since 1945.
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“History suggests that the current decline will be short- lived, and most likely presents a buying opportunity,” the Westport, Connecticut-based research and money-management firm said in a report today.
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While the average 5 percent decline leads to an 8.3 percent drop for the benchmark equity index, Birinyi said a correction forms 33 percent of the time and becoming a bear market is “even less likely,” according to the report. Slides that lead to bear markets have occurred in 10 percent of the cases. A correction is often defined as a 10 percent drop.

Laszlo Birinyi, the firm’s founder, said in December that the S&P 500 may climb to 1,333 in 2011. The firm said in its February report that may be conservative, as “2011 has gotten off to a positive start.” The index is forecast to rally 11 percent to 1,400 from yesterday’s close, according to the average projection of 13 strategists surveyed by Bloomberg.