U.S. investors and business owners see rosy future
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U.S. investors and business owners see rosy future

Bank of America Merrill Lynch released a survey yesterday that shows that investors are more positive about the global economy than they’ve been since 2011. The optimism sweeping through U.S. investors and business people is, of course, directly linked to new president Donald Trump’s promise of a number of “phenomenal” incoming policies.

 Investors are emphatically positive about the next 12 months:

mer lyn 12m

Source: Bank of America Merrill Lynch Global Fund Manager Survey

 Bank of America Merrill Lynch’s credit team seemed to agree with investors, issuing the following note (which was unconnected with the survey) on Tuesday:

“The U.S. economy is not only humming on all cylinders, but in our view the optimism associated with a clean sweep by the Republicans in Washington is likely to create a self-fulfilling period of strong markets and at least the potential for strong growth,”

Small business owners are even more positive than investors. While investors haven’t felt this good about the global economy in five years, business people in January were the most optimistic they’ve been in a decade, according to the National Federation of Independent Business.

sm bus

However, this ‘glass half-full’ approach to the global economy doesn’t mean there’s no risk of a downturn. Even if President Trump’s tax cuts, fiscal spending boost, and deregulation pus the U.S. economy on the right foot, there are still potential problems looming elsewhere: European elections, a possible trade war, and a crash in the global bond market.

Bank of America Merrill Lynch’s credit team also had concerns over the possibility of an overheating U.S. economy, a Federal Reserve on the back foot, and the chance that investors were thinking too wishfully about the new administration. In the eventuality that these American worries come to pass, they wrote that:

“This sets up the market for two potential scenarios: either a series of hikes that hurts credit investors, or a fall in confidence akin to the debt ceiling debate of 2011.”

But that’s speculation. What do we know for sure? Investors and small businesses in the world’s largest economy are more optimistic about growth than they’ve been in years: and that has to be a good thing!

The opinions in this article do not reflect those of Dominion Fund Management Limited, and in the instance of any forward-looking statements, these should not be construed as advice.

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