Things aren’t looking good overseas, either, right now. According to a newly released Merrill Lynch Survey of Fund Managers, more than 60 percent of respondents believe a global economic recession is likely in the next 12 months. The fear is pushing investors to their “most risk-averse mindset yet recorded” as the survey’s Risk & Liquidity composite has fallen to its lowest level in over a decade.
According to the survey, investors are adopting more defensive strategies and shortening their investment time horizons. Thirty-nine percent of respondents are rating liquidity conditions as negative, and rank the eurozone as their least favorite destination.
A majority of European investors predict a recession in Europe within the next 12 months, and 65 percent of respondents believe Europe’s monetary policy is too restrictive.
“These fears have ricocheted into wild moves in sector popularity. European fund managers are migrating towards lower risk industries – feasting on food and beverages while purging positions in commodities,” says Karen Olney, lead European equities strategist at Merrill Lynch.