The early withdrawal of the currency stimulus continues to be the main fear of financial managers, however, the recovery of the economy in April has strengthened their confidence in its positive impact on equities. Thus, according to a survey conducted by Bank of America in April, betting on stocks is at a maximum of ten years and positive betting on banks is at its highest level since May 2018.
In fact, for the first time since that day banks have been a heavier sector, reflecting how portfolios are spinning towards higher turnover stocks in the heat of reactivating the economy after the epidemic.
More than a year after the epidemic broke out, only 15% of surveyed managers considered Covid-19 to be a major risk, placed at the same level as fears of a tax increase, and 15%. The main market risk, which they appreciate with 32%, appears to be the early withdrawal of monetary stimulus from the central banks, and secondly, the fear of rising inflation, which is closely linked to this first risk, with 27%.
Although less severe than in February, the rise in inflation is likely to lead to a stock market correction. According to the survey, the market does not believe that 1.5% US rates could cause the stock market to fall. If the 2% level is significant and the treasury is kept at 2.1%, it could cause a 10% drop in the stock market. That level of sell-off in the stock market rose to 2% in the previous month’s survey.
Only 7% of managers believe the US stock market is at bubble level, yet 74% believe Bitcoin is a bubble. Only 16% deny it.