What Fund Managers Are Thinking

When you're interested in what people think about the economy, it's generally wise to ask those who are forced to put their money where their mouth is. BofA Merrill Lynch surveys investment fund managers worldwide every month, and the global trends there are not good. A net margin of 24 percent of June's responding fund managers* think the worldwide economy will grow over the next 12 months. That's down from a net margin of 42 percent in May and 61 percent in April.

Remember, this is the worldwide economy we're talking about, and the biggest culprit in the downward trend here is Europe. A margin of 7 percent of all fund managers in Europe expect the European economy to improve over the next year, down from 23 percent in May. The number of fund managers thinking European earnings would improve over the next year was a net of 74 percent in April; that number has fallen all the way to 20 percent.

Is there any good news in the survey? A net margin of 38 percent of all fund managers think stocks are currently undervalued, the biggest margin this survey has found in over a year. That's the kind of confidence survey that might actually have an effect on the economy - if fund managers think stocks are a good value right now, they're the people in the best position to start buying them up.

*This is the odd way BofA Merrill Lynch has chosen to report the survey numbers; it means that, in this case, the difference between the number of fund managers expecting the economy to grow and those expecting it to shrink is 24 percentage points.