The third report might be taken from either a bullish or bearish tone: 45% of money managers are still overweight equities, but that's down from 67% a month earlier. The bullish case is that positive sentiment is declining. The bearish case is that you would expect a lot worse sentiment reading than 45% overweight, given the current news stream. Unfortunately, it was conducted on the 10th of March, right before the earthquake and the subsequent events. So it might make it outdated already.
March 15 (Bloomberg) -- The Standard & Poor’s 500 Index reached its low for 2011 when the 9-magnitude earthquake in Japan earlier sent the benchmark to 1,261.12, according to JPMorgan Chase's Thomas Lee.
The benchmark index will rise to 1,425 by the end of the year, with oil prices retreating from their highs and global growth benefiting from Japan’s rebuilding, according to Lee’s year-end estimate. His forecast compares with the average of 1,400 from 13 strategists surveyed by Bloomberg News.
“The unfortunate events in Japan have brought us to our estimated low for the year,” Lee wrote today. “In a nutshell, we see the sell-off as creating potentially a very bullish opportunity.”
March 15 (Bloomberg) -- The Standard & Poor’s 500 Index’s decline since Feb. 18 presents a buying opportunity because the pullback will be “modest,” according to Bank of America Corp.’s Mary Ann Bartels.
The S&P 500 has “key” support at 1,270, and “there is no technical evidence to suggest an end to the cyclical bull-market rally that began in March 2009,” Bartels, the head of U.S. technical analysis, said. The benchmark gauge for U.S. stocks fell 1.1 percent to 1,281.87 in New York after sinking as much as 2.7 percent earlier.
“We continue to believe that this will be a modest pullback and a buying opportunity,” Bartels wrote in a note dated yesterday. “The U.S. equity market remains resilient despite ongoing concerns about the European periphery, Middle East, higher crude oil prices and fears of global economic growth slowing.”
March 15 (Bloomberg) -- Money managers reduced their holdings in global stocks and raised cash levels as crude oil rose and optimism about emerging markets continued to deteriorate, a BofA Merrill Lynch Global Research survey showed.
A net 45 percent of 291 respondents, who together manage $784 billion, are “overweight” equities in March. That’s down from 67 percent last month, which was the most bullish reading at any time in the past decade.
The survey was concluded on March 10, one day before Japan’s biggest earthquake on record and the subsequent tsunami that damaged three nuclear reactors and sent equity markets reeling. The MSCI World (MXWO) Index has tumbled 6.7 percent since reaching a 2 1/2-year high on Feb. 18 as crude oil surged above $100 a barrel amid protests in the Middle East and North Africa.
A net 14 percent of respondents are “overweight” cash in March as the measure of risk appetite fell for the first time in six months. That compares with a net 9 percent who were “underweight” the asset class last month. Hedge funds also reduced their net exposure to equity markets to 34 percent from 39 percent in February.
Stocks in developing markets continued to fall out of favor, with investors now neutral on the region. That compares with a net 5 percent who were “overweight” emerging market stocks in February and 43 percent in January.
Money managers also reduced their holdings in U.S. equities as growth estimates saw sharp downward revisions, the survey showed. A net 23 percent are now “overweight” North American stocks, down from 34 percent in February. Holdings in U.K. and European stocks were largely unchanged.