| Let's hope so. Last week, Merrill Lynch released its | | | | Lynch's survey claims that money managers believe |
| monthly survey of portfolio managers, strategists | | | | that bonds are excessively overvalued, while equities |
| and economists around the globe, realizing something | | | | are grossly undervalued. |
| interesting. While the overall sentiment concerning the | | | | There are other factors indicating that at least the |
| global economy and markets remained depressing, it | | | | U.S. economy might be stabilizing. Notably, two key |
| turns out not everything is so depressing. It appears | | | | factors -- housing and manufacturing -- remained flat |
| that the global sentiment of people who in aggregate | | | | in November after months of brutal declines. On the |
| own about three-quarters of all equities has | | | | other hand, risk evaluations remain exceptionally high. |
| improved, albeit not completely. | | | | Many among portfolio managers are worried that if |
| What views have improved in particular? Almost all, | | | | they start putting money back into equities, they |
| including views on the global economy, risk | | | | might end up caught in a "valuation trap," when the |
| management, earnings, asset valuations, etc. It is true | | | | market moves against irrationally, as it did so many |
| that the global sentiment has at best moved from | | | | times in so many cases these past few months. |
| the "worst" in a generation to just "worse;" but this | | | | What're my two cents? I don't think that one survey |
| is how positive turnarounds usually begin -- from the | | | | is enough to convince me that global sentiment is |
| bottom moving upwards. | | | | changing dramatically. Merrill Lynch's survey reflects |
| Merrill Lynch's survey concludes, "After the extreme | | | | the opinions of institutional investors who are not |
| pessimism of the past two months, there is evidence | | | | backing their views with concrete actions just yet, as |
| of investors pulling back from the brink. We have | | | | evidenced by still seeing no money on the table. |
| been struck by tentative signs that the pace of | | | | Although, I have to say I'd really like to believe that |
| deterioration may be slowing." | | | | global markets have factored in all the worst of the |
| More specifically, the number of survey participants | | | | worst scenarios and that the true bottom has been |
| who called for continued declines in the global | | | | reached. I'd like to believe there is no more bad news |
| economy decreased from 60% in October to 36% in | | | | to hit us when we're already down, if not two or |
| November. As far as interest rates are concerned, | | | | three feet under. |
| only 29% of survey participants still believe that | | | | Profit Confidential |
| interest rates are far too high to have any impact on | | | | LOMBARDI PUBLISHING CORPORATION |
| the economy, which is considerably down from 65% | | | | News, Analysis, and Information Services Since 1986. |
| in November. Note that the 29% figure does not | | | | One Million Customers in 141 Countries. |
| even take into account the Fed's move last week to | | | | Lombardi Publishing Corporation |
| cut interest rates near to zero. | | | | Financial Publications Division |
| What do these two figures in particularly mean? As | | | | 350 Fifth Avenue, Suite 3304 |
| far as I can see, they are giving comfort to central | | | | New York, NY 10118-3304 |
| bankers, who now have "confirmation" that their | | | | Copyright 2008; Lombardi Publishing Corporation. All |
| aggressive monetary policies are delivering the first | | | | rights reserved. No part of this e-newsletter may be |
| results. Sure, such sentiment could also mean that, | | | | used or reproduced in any manner or means, including |
| instead of remaining on the sidelines, institutional | | | | print, electronic, mechanical, or by any information |
| investors might be ready to get back into the game | | | | storage and retrieval system whatsoever, without |
| at long last, thus effectively drawing the bottom line | | | | written permission from the copyright holder. |
| for global equities. As a supporting argument, Merrill | | | | |