The BofA Merrill Lynch June fund manager survey has found that allocation to US equities has climbed 16 percentage points to net one percent overweight, for the first time investors in 15 months with 64 percent of respondents saying that the US has the most favourable outlook for profits, a 17-year high.
June rotation shows investors are selling cyclical plays (banks, emerging markets and Eurozone equities) in favour of defensive sectors and US equities.
When asked what catalyst is most likely to stop Fed tightening, 69 percent of investors surveyed state domestic reasons (lower inflation, higher unemployment, Fed independence) and 23 percent cited emerging market contagion or a debt crisis in the peripheral EU.
Also a record 42 percent of investors surveyed say companies are over levered, far exceeding the 32 percent peak in 2008.
Additonally, the survey found that just net one percent of investors indicate they think the global economy will strengthen over the next 12 months, barely above the boom/bust threshold and still at their lowest level since February 2016.