Varney: No other stocks dominate like Big Tech
FOX Business’ Stuart Varney says American companies like Amazon, Apple, Microsoft, Google and Tesla are helping lead recent market rallies.
Big money managers are becoming more cautious on the speed and shape of the economic recovery from COVID-19 lockdowns.
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Fourteen percent of fund managers surveyed in July by Bank of America expect a V-shaped recovery from the sharpest economic slowdown of the post-World War II era.
That number is down from 18 percent who expected a sharp climb back once the downturn bottomed out in the prior month. The percentage of investors anticipating a W-shaped recovery, featuring an interrupted rally and a second downturn, rose to 30 percent from 21 percent while those predicting a slower U-shaped recovery ticked up to 44 percent from 43 percent.
While 72 percent of investors foresee stronger global growth, “conviction in strength and duration” of the recovery are low, according to Michael Hartnett, chief investment strategist at Bank of America.
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The Charlotte, North Carolina-based lender surveyed 188 investors with $570 billion in assets under management between July 2 and July 9, a time when the number of new daily COVID-19 infections were at a record high.
The amount of cash investors accumulated rose to 4.9 percent of their portfolios, from 4.7 percent, amid the spike. Fifty-two percent of respondents believed that a second wave of COVID-19 infections is the “biggest tail risk” to markets.
Still, cash levels remained below the 5.9 percent seen in April, which was the highest since the Sept. 11, 2001 terrorist attacks on the U.S.
As big money investors raised cash, they increased their health care allocation to a net 35 percent overweight and technology to a net 42 percent overweight.
Technology was considered to be the “most crowded trade” by a record 74 percent of respondents due to investor positioning and stretched performance. Meanwhile energy and banks, two of the hardest-hit sectors by COVID-19, were considered to be good “contrarian longs,” or bets on growth.
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Ahead of the 2020 election, 34 percent of investors said they would likely take no action while 31 percent expected to reduce their risk exposure. Another 15 percent were preparing for increased volatility and 13 percent planned on selling the U.S. dollar.
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