Wall Street is usually the first to reflect changing realities in the world. Judging by its response, a change for the better is in sight. According to a Bank of America survey, the world's largest investors believe the coronavirus pandemic is over and no longer poses a serious threat.
The results of the survey are seen to be credible as it polled 220 respondents with $630 billion in assets. For the first time since February 2020, institutional investors no longer view the coronavirus as the number one tail risk. Apparently, Wall Street has entered a phase of euphoria. The survey shows that 91% of fund managers expect accelerated economic growth, while 89% - an increase in corporate profits. Market sentiment has not been so optimistic since 1994, the last similar poll.
Survey respondents are unanimous in expecting a quick bounce-back in economic activity due to money-printing at the world's biggest central banks. The global economy is anticipated to see a sharp rise in inflation. About 70% of fund managers predict a boom in prices in the next 12 months. Considering $10 trillion injected into the markets by global central banks, Wall Street's inflation expectations have reached record highs. There is already a surge in demand for commodities: their share in portfolios has surpassed the peak of February 2011. Over the past year, global equity market capitalization has grown by a third, exceeding $100 trillion despite the deepest recession of the world economy since the 1940s. Food prices have rocketed to their highest level in six years, and metals - in seven years.
Notably, only 15% of respondents consider that stocks are in a bubble. Most are confident that the market will sail through this rally.
