ZuluTrade Blog

Mid & Long Term

The European Debt Crisis is no longer the biggest worry among money managers ...

Thursday, September 20, 2012 8:37 AM GMT

For the first time in over a year global investors think the U.S. fiscal cliff is more of a risk to the global economy than Europe's sovereign debt crisis. 

And more of them think the economy will go over the fiscal cliff under president Obama.

The survey of 253 panelists with $681 billion of assets under management (AUM) was conducted between September 7 to September 13.

Here are some highlights:


On the U.S.

·         The U.S. fiscal cliff is seen as more of a risk than the European debt crisis for the first time since April 2011. 

·         38 percent think a fiscal cliff is more likely under president Obama, compared with 26 percent under a Romney presidency.

·         Investors cut their U.S. equity holdings for a third straight month. 58 percent think U.S. stocks are overvalued, the highest level since 2004.

On Europe

·         42 percent no longer expect a Grexit. Meanwhile, those who do expect it to leave have pushed their expectations further. 

·         The percent of investors who most fear the European sovereign risk fell to 33 percent, from 48 percent in August.

·         Pessimism among European investors is declining. "European investors are equally split on whether region’s economy will strengthen or weaken in the next 12 months – whereas in August a net 23 percent said it would weaken."

On China

·         Growth expectations for China rose to their highest level since October 2010.

On the global economy

·         A net 20 percent of investors think global fiscal policy is too restrictive.

·         14 percent think the global economy is in the recession phase, the highest level since December 2011. But 68 percent think the economy is in the mid-late cycle in maturity.  

·         Concerns about inflation were at a 15-month high.

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