Cash is Now Trash

Market Watch The Bank of America Merrill Lynch survey of global investment managers shows that global investors went underweight cash for the first time in five years in October. Investor risk appetite is at its highest in three years, and asset allocators are now shifting more money out of cash and into equities. A net 39% of surveyed money managers think profits will rise by at least 10% in the next 12 months, up from the 25% who were of that view in September. A net 65% of respondents report believing that a global recession is unlikely in the next 12 months, up from 47% a month earlier.

* Investment managers are now putting more money into European equities, which they see as undervalued. The net 30% saying European equities are now undervalued is the highest since April 2001.

* The dollar is seen as undervalued and the yen as very overvalued, implying central-bank intervention in currency markets could prove successful

* A net 36% of respondents also said they would most like to overweight emerging markets in the next year.

* Conversely, Japan confidence has continued to drop over the past couple of months. A structural underweight in financials is sapping other sectors, making Japan left out of a generally upbeat global view.