Tags: fund | managers | economy | Fed

Merrill Lynch Survey: Fund Managers Most Bearish on Global Economy in 2 Years

By    |   Tuesday, 14 October 2014 10:23 AM

Federal Reserve officials aren't the only ones expressing concern about the strength of the global economy.

Only a net 32 percent of the 220 respondents in the Bank of America Merrill Lynch Fund Manager Survey, conducted Oct. 3 through 9, expect the world economy to strengthen during the next year. That's the lowest level since 2012.

Fund managers were apparently concerned about the Fed's moves to shrink its massive easing program. The Fed will likely announce an end to its quantitative easing later this month.

And until last weekend, most economist expected the Fed to begin raising interest rates around mid-2015. But comments by central bank officials last weekend indicated the date may be pushed further back.

"If foreign growth is weaker than anticipated, the consequences for the U.S. economy could lead the Fed to remove accommodation more slowly than otherwise," Fed Vice Chairman Stanley Fischer said in a speech last weekend.

In the survey, only a net 18 percent of fund managers called Fed policy too stimulative, the lowest level since August 2012.

As for the cause of global economic weakness, Nobel laureate economist Paul Krugman blames government policy. "Austerity when economies needed stimulus, paranoia about inflation when the real risk is deflation, and so on," he wrote in The New York Times.

So why do governments insist on these flawed policies? "The answer, I'd suggest, is an excess of virtue. Righteousness is killing the world economy," Krugman explained.

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Federal Reserve officials aren't the only ones expressing concern about the strength of the global economy.
fund, managers, economy, Fed
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2014-23-14
Tuesday, 14 October 2014 10:23 AM
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