dinsdag 13 juni 2017

A Record Number Of Market Participants Says The Market Is Overvalued, Surpassing 1999 Bubble Highs

The latest monthly Fund Managers (FMS) survey from Bank of America is out, and continuing the trend noted in previous months when the number of active managers who said that stocks are overvalued hit the highest in nearly two decades, the latest version reveals that the number of respondents saying that equities are overvalued has just hit a record high, surpassing the all time high set during the 1999 bubble. As shown in the chart below, 44% of fund managers now say equities are overvalued, the highest response on record, and up from 37% in May.
# Meanwhile, "excess valuation" concern coincide with high global profit expectations, just like prior to the 2000 recession, "shows that market vulnerability to profit weakness is very high" according to BofA...


Not surprisingly, 84% of investors think US is the most overvalued region, a new all-time high, while a net 18% think European equities are undervalued and a net 48% of investors think EM equities remain undervalued...


Meanwhile, even as the market rose to record highs, FMS cash "on the sidelines" rose from 4.9% to 5.0% in May according to BofA, which is well above the average cash level over the past decade of 4.5%. avg...


BofA suggest that while ominous on the surface, and in contrast to the 1999 bubble, the record June FMS views of "excess valuation" does not coincide with a fall in cash levels, which to BofA's Michael Hartnett suggests there is no irrational exuberance. Then again, this time the exuberance appears to be manifesting itself via passive investing and ETFs, as well as vol bets, so it is unclear if such comparisons are appropriate...