Well happy GDP and FOMC day! Surprised to see a contraction in the Q4 GDP data we got this morning. We’ll see what the Fed has to say this afternoon, I wonder if Bernanke is making some quick edits to the statement after this likely unexpected drop in economic growth. Futures knee jerk reaction was down after the GDP print but as of this writing appear to be stabilizing somewhat.
Merrill Lynch has put out some great material on sentiment of money managers. One of my favorite blogs, The Short Side of Long posted the following chart and quotes from the ML’s Fund Manager Survey.
From The Short Side of Long:
On the other hand, fund managers are taking “larger-than-normal” risk, while the number “taking out market protection” fell to the lowest reading since the survey question was introduced. Once again, similar readings were wittiness in April 2010 and February 2011, and eventually markets corrected meaningfully.
Tiho also put up a chart (not shown) from ML that shows fund managers have taken their equity exposure near the highs last seen in early 2011. IF we see equities become out of favor and IF it happens quickly it appears that many investors (both professional and individual) will not be prepared for it. Professional money managers have voted that protection against a large drop in equities is unnecessary.
While I’ve had a few indicators flip negative I’ve yet to see them do so in concert with one another to the degree to become overly bearish. As I’ve written numerous times on this blog, I respect what price action dictates and while I may have an opinion of where I think things are headed I refuse to let that opinion override price. Stay smart out there.
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