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Global fund managers added risk in November, no longer explicitly gearing their portfolios to assets that outperform in a low-growth and low-inflation environment, Bank of America Merrill Lynch reported Wednesday.

“The bulls are back,” Merrill’s chief investment strategist, Michael Hartnett, said in a statement. “Investors are experiencing FOMO — the fear of missing out — which has prompted a wave of optimism and jump in exposure to equities and cyclicals.”

Merrill’s fund manager survey was conducted Nov. 1 to 7 among 230 panelists with $700 billion in assets under management.

Investors’ concerns about a possible recession have vanished, as net 6% of managers polled said they expected a stronger global economy in 2020, up 43 percentage points from the October survey. Merrill said this was the biggest month-on-month jump on record.

Net 31% of investors said they expected higher global consumer prices in the next year, up 29 points from October.

Sixty-one percent said they expected the global two-year/10-year yield curve to steepen in coming months, up from net -30% last December and the highest level in three years.

As to which asset class will be the top performer next year, 52% of fund managers put their money on equities, while 21% said it would be commodities and 10% said cash.

Fixed income came in last even though long U.S. Treasuries was the most crowded trade from June to October this year.

Thirty-seven percent of survey respondents said they expected the U.S. dollar to depreciate in the next 12 months. Merrill noted that this was the weakest outlook on the greenback since September 2007.

Global corporate profit expectations improved by 25 points in the November poll, with net 10% of investors saying they expected profits to deteriorate over the next year.

Allocations

Fund managers’ cash levels fell to 4.2% from 5% in October, the biggest monthly drop in three years and lowest cash balance since June 2013. Thus, the fund manager cash rule fell out of “buy” territory for the first time since January 2018.

The cash rule holds that when average cash balance rises above 4.5%, a contrarian buy signal is generated for equities. When the cash balance falls below 3.5%, a contrarian sell signal is generated.

Investors’ cash allocation fell 20 points to 18% overweight, below the long-term average of 21% and the lowest cash allocation since November 2015 when it stood at 16%.

Allocation to global equities rose 20 points month-on-month to net 21% overweight, a one-year high. Merrill reported that investors sold bonds for equities, the bond allocation slipping nine points to 47% underweight, its lowest level since last November’s 58% underweight.

The new survey showed that investors had made a risk-on rotation into value stocks, equities, banks and Europe, and out of cash, large-cap stocks, utilities, staples and bonds.

Trade war concerns continued to top the list of tail risks, cited by 39% of investors. On Tuesday, President Donald Trump intimated in a speech that a trade deal with China might be imminent, but also threatened more tariffs.

Sixteen percent of investors saw a bond market bubble as the biggest tail risk, followed by 12% who said it was monetary policy impotence and 11% who cited a slowdown in China.

Long U.S. tech and growth stocks stood astride the list of the most crowded trades, identified by 30% of fund managers, ahead of long U.S. Treasuries, cited by 21%, and long investment-grade corporate bonds, noted by 20%.

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