Fund managers gloomy and ambivalent

It probably comes as no surprise that the monthly survey of global fund managers from Merrill Lynch finds a mood of deep pessimism. However, the views expressed are not entirely consistent with each other.
A net 69% of managers expect a global recession – defined as two consecutive quarters of falling GDP – in the coming 12 months. In contrast, consensus forecasts are for global GDP growth of about 2.5%.
Despite the macroeconomic gloom a net 43% say equities are undervalued at present – the highest level in more than a decade. For the more bullish managers the question is what could be the catalyst for them to put their cash back to work in the equity markets. Better than expected economic growth in China is one possible scenario.
Next week’s Fund Strategy will discuss the results of the survey in more detail.