United Arab Emirates - November 18, 2020: Bottom line: the most bullish Fund Manager Survey (FMS) of 2020 on the back of vaccine, election, macro; Nov FMS shows a big drop in cash, 20-year high in GDP expectations, big jump in equit
Cash bears: FMS cash levels sink to 4.1% from 4.4%, now below the pre-COVID-19 level (was 4.2% in Jan), close to triggering FMS Cash Rule 'sell signal' (occurs when cash <4% - see Rules & Tools); BofA Bull & Bear Indicator trending higher at 4.2.
Vaccine bulls: COVID-19 remains #1 'tail risk'; but FMS investors continue to pull forward their timing of 'credible vaccine', now expected Jan'21 (was Feb'21).
Macro bulls: global growth & profit optimism at 20-year high; big majority (66%) now say macro in 'early-cycle' phase, not recession; small majority of CIOs still want CEOs to improve balance sheet (47%), but desire for capex (the 2021 key to sustained economic recovery) on the rise (38%).
Risk bulls: all-time high in FMS investors expecting a steeper yield curve (73%); allocation to equities (net overweight 46%) highest since Jan'18 and close to extreme bullish (i.e. >50%); allocation to cash (net 7%) lowest since Apr'15.
Rotation bulls: Nov FMS shows unambiguous rotation to EM, small cap, value, banks, funded by lower allocation to cash, bonds, staples; note cyclical assets such as EAFE (Japan, Eurozone, UK) and energy stocks lagging the Q4 bullish rotation.
2021 fave trades: asked for their 3 favorite 2021 Year Ahead trades, FMS investors said #1 long Emerging Markets, #2, long S&P500, #3 long oil (Chart 1); FMS investors still regard long tech as by far and away most 'crowded trade' in Nov'20.
Nov FMS contrarian trades: Q4 contrarian bulls would position for completion of 'full bull' reopening rotation via longs in Japan, Eurozone, UK, and energy stocks; contrarian bears would position for flatter yield curve trades e.g. long staples heading into late-20/early-21 'top'.